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Senate Study Bill 1094 - IntroducedA Bill ForAn Act 1concerning public contracts with companies that boycott
2certain companies or that engage in nonpecuniary social
3investment policies.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 12.8, subsection 1, Code 2023, is amended
2to read as follows:
31. The treasurer of state shall invest or deposit, subject
4to chapters 12F, 12H, and 12J, and 12K and as provided by law,
5any of the public funds not currently needed for operating
6expenses and shall do so upon receipt of monthly notice from
7the director of the department of administrative services of
8the amount not so needed. In the event of loss on redemption
9or sale of securities invested as prescribed by law, and if
10the transaction is reported to the executive council, neither
11the treasurer nor director of the department of administrative
12services is personally liable but the loss shall be charged
13against the funds which would have received the profits or
14interest of the investment and there is appropriated from the
15funds the amount so required.
16 Sec. 2. NEW SECTION. 12K.1 Legislative findings and intent.
17The general assembly is deeply concerned over the increased
18prevalence of investing based on social and environmental
19factors, known as environmental, social, and governance
20investing, rather than pecuniary factors. Therefore, the
21general assembly intends to ensure that state funds and funds
22administered by the state, including public employee retirement
23funds, are protected from political influence detrimental to
24the financial health of the state and its citizens and promote
25the general assembly’s goal of protecting free enterprise.
26 Sec. 3. NEW SECTION. 12K.2 Definitions.
27As used in this chapter, unless the context otherwise
28requires:
291. “Boycott of certain companies” means, except as otherwise
30provided in chapters 12F, 12H, and 12J or without a reasonable
31business purpose, refusal to invest in a company, termination
32of business activities with a company, or another action that
33is intended to penalize, inflict economic harm on, or limit
34commercial relations with a company because the company does
35any of the following:
-1- 1a. Engages in, or does business with a company that engages
2in, the exploration, production, utilization, transportation,
3or sale of fossil fuel-based energy, timber, mining, or
4production agriculture.
5b. Engages in, or does business with a company that engages
6in, the manufacturing, distribution, sale, import, export, or
7lawful use of firearms, firearm parts, firearm accessories, or
8ammunition.
92. “Company” means any business or business entity, bank,
10national banking association, nonbank financial institution,
11financial services company, investment company, bank and trust
12company, trust company, savings and loan association, building
13and loan association, mutual savings bank, credit union, or
14savings bank, including a wholly owned subsidiary, majority-
15owned subsidiary, parent company, or affiliate of such business
16or business entity, that exists for the purpose of making a
17profit.
183. “Nonpecuniary social investment” means, except as
19otherwise provided in this chapter and chapters 12F, 12H,
20and 12J, investment or commitment of public funds to further
21environmental, social, governance, political, or ideological
22interests and for the purpose of obtaining an effect other than
23a maximized return to the public fund without a reasonable
24business purpose.
254. “Public entity” means the state, political subdivisions
26of the state, public school corporations, and all public
27officers, boards, commissions, departments, agencies, and
28authorities empowered by law to enter into public contracts for
29the expenditure of public funds, including the state board of
30regents and institutions under the control of the state board
31of regents. “Public entity” includes a public fund.
325. “Public fund” means the treasurer of state, the state
33board of regents, the public safety peace officers’ retirement
34system created in chapter 97A, the Iowa public employees’
35retirement system created in chapter 97B, the statewide fire
-2-1and police retirement system created in chapter 411, or the
2judicial retirement system created in chapter 602.
36. “Reasonable business purpose” means includes any purpose
4directly related to any of the following:
5a. Promoting the financial success or stability of a
6company.
7b. Mitigating risk to a company.
8c. Complying with legal or regulatory requirements.
9d. Limiting liability of a company.
107. “Scrutinized company” means any company that engages in
11nonpecuniary social investment on behalf of a public entity or
12a boycott of certain companies on behalf of a public entity.
138. “Scrutinized company list” means the list of scrutinized
14companies prepared, maintained, and published by a public fund
15pursuant to section 12K.3.
16 Sec. 4. NEW SECTION. 12K.3 Identification of scrutinized
17companies — notice.
181. a. By March 1, 2024, a public fund shall make its best
19efforts to identify or have identified any scrutinized company
20that the public fund has entered into a contract with to
21provide investment or management of securities services for the
22public fund. The public fund shall create and make available
23to the public a scrutinized company list for that public fund.
24The public fund shall review on an annual basis and update, if
25necessary, the scrutinized company list.
26b. In making its best efforts to identify or have identified
27a scrutinized company, the public fund shall consider and may
28rely upon any of the following information:
29(1) A company’s certification that it is not engaged
30in nonpecuniary social investment or a boycott of certain
31companies.
32(2) Publicly available information made by the company,
33including information that may be provided by nonprofit
34organizations, research firms, and international organizations,
35or publicly available statements by a member of a company’s
-3-1governing body, an executive director of a company, or any
2other officer or employee of the company with the authority to
3issue policy statements on behalf of the company.
4(3) Information published by the state or federal
5government.
6c. The Iowa public employees’ retirement system, acting
7on behalf of the system and other public funds subject to
8this section, may develop and issue a request for proposals
9for third-party services to complete the identification of
10any scrutinized company and the compilation of a scrutinized
11company list. The Iowa public employees’ retirement system
12shall consult with all other public funds on the development of
13the request for proposals. However, selection of a successful
14proposal and the final scope of services to be provided shall
15be determined only by those public funds that have agreed to
16utilize the third-party services. If more than one public fund
17decides to utilize the third-party services, the participating
18public funds shall equally share the costs of such services.
192. a. For each company on the scrutinized company list, the
20public fund shall send or have sent a written notice informing
21the company of its status as a scrutinized company and that
22it may become subject to contract termination with the public
23fund.
24b. If, following notice as provided by this section, a
25company ceases activity that designates it as a scrutinized
26company and submits a written statement to the public fund that
27it has ceased engaging in nonpecuniary social investment or a
28boycott of certain companies, the company shall be removed from
29the scrutinized company list.
30 Sec. 5. NEW SECTION. 12K.4 Public funds — contract and
31investment requirements.
321. A public fund shall not enter into a contract with a
33company to provide investment or management of securities
34services to the public fund so long as such company remains on
35the public fund’s scrutinized company list as provided in this
-4-1chapter or if the company would engage in nonpecuniary social
2investment or a boycott of certain companies on behalf of the
3public fund.
42. a. In accordance with sound investment criteria and
5consistent with fiduciary obligations, a public fund shall
6terminate a contract to provide investment or management
7of securities services with a company on the public fund’s
8scrutinized company list, so long as the company remains on
9that list, within eighteen months following the first written
10notice sent to the scrutinized company as required by section
1112K.3.
12b. This subsection shall not be construed to require the
13premature or otherwise imprudent termination of a contract, but
14any termination of a contract shall be completed as provided
15by this subsection.
16 Sec. 6. NEW SECTION. 12K.5 Reports.
171. Scrutinized companies list. Each public fund shall,
18within thirty days after the scrutinized company list is
19created or updated as required by section 12K.3, make the list
20available to the public.
212. Annual report. On October 1, 2024, and each October
221 thereafter, each public fund shall make available to the
23public, and file with the general assembly, an annual report
24covering the prior fiscal year that includes the following:
25a. The scrutinized company list as of the end of the fiscal
26year.
27b. A summary of all written notices sent as required by
28section 12K.3 during the fiscal year.
29c. All contracts terminated as provided in section 12K.4
30during the fiscal year.
31 Sec. 7. NEW SECTION. 12K.6 Public entities — contract
32requirements.
33A public entity shall not enter into a contract of one
34thousand dollars or more with a scrutinized company included on
35a scrutinized company list created by a public fund pursuant
-5-1to section 12K.3 for services including but not limited to the
2investment or management of securities in which any public
3funds are invested.
4 Sec. 8. NEW SECTION. 12K.7 Public funds — legal
5obligations.
61. With respect to actions taken in compliance with this
7chapter, including all good-faith determinations regarding
8companies as required by this chapter, the public fund shall
9be immune from any liability and exempt from any conflicting
10statutory or common law obligations, including any such
11obligations in respect to choice of asset managers, investment
12funds, or investments for the public fund’s securities
13portfolios.
142. This chapter shall not limit the ability of a public fund
15to terminate the contract of an investment manager or other
16vendor at any time and for any reason in the exercise of the
17public fund’s fiduciary duties.
18 Sec. 9. Section 35A.13, subsection 4, paragraph a, Code
192023, is amended to read as follows:
20a. Notwithstanding subsection 5, moneys in the fund, except
21so much of the fund as may be necessary to be kept on hand
22for the making of disbursements under this section, shall
23be invested by the treasurer of state, in consultation with
24the commission and the public retirement systems committee
25established by section 97D.4, in any investments authorized for
26the Iowa public employees’ retirement system in section 97B.7A,
27including common stock, and subject to the requirements of
28chapters 12F, 12H, and 12J, and 12K, and the earnings therefrom
29shall be credited to the fund. The treasurer of state may
30execute contracts and agreements with investment advisors,
31consultants, and investment management and benefit consultant
32firms in the administration of investments of moneys in the
33fund.
34 Sec. 10. Section 97A.7, subsection 1, Code 2023, is amended
35to read as follows:
-6- 11. The board of trustees shall be the trustees of the
2retirement fund created by this chapter as provided in section
397A.8 and shall have full power to invest and reinvest funds
4subject to the terms, conditions, limitations, and restrictions
5imposed by subsection 2 and chapters 12F, 12H, and 12J, and
612K and subject to like terms, conditions, limitations, and
7restrictions said trustees shall have full power to hold,
8purchase, sell, assign, transfer, or dispose of any of the
9securities and investments of the retirement fund which have
10been invested, as well as of the proceeds of said investments
11and any moneys belonging to the retirement fund. The board
12of trustees may authorize the treasurer of state to exercise
13any of the duties of this section. When so authorized the
14treasurer of state shall report any transactions to the board
15of trustees at its next monthly meeting.
16 Sec. 11. Section 97B.4, subsection 5, Code 2023, is amended
17to read as follows:
185. Investments. The system, through the chief investment
19officer, shall invest, subject to chapters 12F, 12H, and 12J,
20and 12K and in accordance with the investment policy and
21goal statement established by the board, the portion of the
22retirement fund which, in the judgment of the system, is not
23needed for current payment of benefits under this chapter
24subject to the requirements of section 97B.7A.
25 Sec. 12. Section 262.14, unnumbered paragraph 1, Code 2023,
26is amended to read as follows:
27The board may invest funds belonging to the institutions,
28subject to chapters 12F, 12H, and 12J, and 12K and the
29following regulations:
30 Sec. 13. Section 411.7, subsection 1, Code 2023, is amended
31to read as follows:
321. The board of trustees is the trustee of the fire
33and police retirement fund created in section 411.8 and
34shall annually establish an investment policy to govern the
35investment and reinvestment of the moneys in the fund, subject
-7-1to the terms, conditions, limitations, and restrictions
2imposed by subsection 2 and chapters 12F, 12H, and 12J, and
312K. Subject to like terms, conditions, limitations, and
4restrictions the system has full power to hold, purchase, sell,
5assign, transfer, or dispose of any of the securities and
6investments in which the fund has been invested, as well as of
7the proceeds of the investments and any moneys belonging to the
8fund.
9 Sec. 14. Section 602.9111, subsection 1, Code 2023, is
10amended to read as follows:
111. So much of the judicial retirement fund as may not be
12necessary to be kept on hand for the making of disbursements
13under this article shall be invested by the treasurer of
14state in any investments authorized for the Iowa public
15employees’ retirement system in section 97B.7A and subject to
16the requirements of chapters 12F, 12H, and 12J, and 12K, and
17the earnings therefrom shall be credited to the fund. The
18treasurer of state may execute contracts and agreements with
19investment advisors, consultants, and investment management and
20benefit consultant firms in the administration of the judicial
21retirement fund.
22EXPLANATION
23The inclusion of this explanation does not constitute agreement with
24the explanation’s substance by the members of the general assembly.
25This bill creates new Code chapter 12K, which restricts
26public funds, defined as the treasurer of state, the state
27board of regents, the Iowa public employees’ retirement system
28(IPERS), the public safety peace officers’ retirement system,
29the statewide fire and police retirement system, and the
30judicial retirement system, and public entities, defined to
31include a public fund and the state and political subdivisions
32of the state, from generally entering into a contract with
33certain companies engaged in nonpecuniary social investment or
34a boycott of certain companies.
35The bill defines “boycott of certain companies” as, without
-8-1a reasonable business purpose or as otherwise required under
2Code chapters 12F, 12H, and 12J, to take any adverse action to
3penalize or limit business opportunities for companies engaging
4or doing business with fossil fuel-based energy, timber,
5mining, production agriculture, firearms, firearm parts,
6firearm accessories, or ammunition companies. “Nonpecuniary
7social investment” is defined to mean, except as otherwise
8provided in new Code chapter 12K in this bill and Code chapters
912F, 12H, and 12J, investment or commitment of public funds
10to further environmental, social, governance, political, or
11ideological interests without a reasonable business purpose.
12The bill also defines “scrutinized company” as any company that
13engages in nonpecuniary social investment on behalf of a public
14entity or a boycott of certain companies on behalf of a public
15entity.
16Concerning public funds, the bill requires each public fund
17to develop and maintain a list of scrutinized companies that
18the public fund has entered into a contract with to provide
19investment or management of securities services for the public
20fund. Each public fund shall determine this list by March 1,
212024, and update it on an annual basis. Once a company is
22listed on the scrutinized companies list of a public fund, the
23bill requires the public fund to send a notice to that company
24relative to the requirements of the bill, to include notice
25that the company may qualify for termination of a contract for
26investment or management of securities services by the public
27fund.
28New Code section 12K.4 requires that a public fund shall
29not enter into a contract with a company to provide investment
30or management of securities services to the public fund of a
31company on the public fund’s most recent scrutinized company
32list or of a company that would engage in nonpecuniary social
33investment or boycott of certain companies on behalf of the
34public fund. If the public fund has a contract for investment
35services with a scrutinized company, the public fund shall
-9-1proceed to terminate the contract with that company in 18
2months, as applicable, so long as the company remains a
3scrutinized company.
4The bill further requires each public fund to prepare
5and make available to the public, and file with the general
6assembly, an annual report, beginning October 1, 2024,
7concerning actions taken by the public fund relative to the
8requirements of new Code chapter 12K in the previous fiscal
9year.
10New Code section 12K.6 provides that a public entity shall
11not enter into a contract of $1,000 or more with a scrutinized
12company included on a scrutinized company list for services
13including but not limited to the investment or management of
14securities in which any public funds are invested.
15The bill further provides that with respect to actions
16taken in compliance with the bill, including all good-faith
17determinations regarding companies as required, the public
18fund shall be immune from any liability and exempt from any
19conflicting statutory or common law obligations, including
20any such obligations in respect to choice of asset managers,
21investment funds, or investments for the public fund. In
22addition, the bill provides that the requirements of the bill
23shall not limit the ability of a public fund to terminate
24any contract of an investment manager or other vendor in the
25exercise of the public fund’s fiduciary duties.
26The bill makes conforming changes to Code sections 12.8,
2735A.13, 97A.7, 97B.4, 262.14, 411.7, and 602.9111.
-10-ec/rn
2certain companies or that engage in nonpecuniary social
3investment policies.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 12.8, subsection 1, Code 2023, is amended
2to read as follows:
31. The treasurer of state shall invest or deposit, subject
4to chapters 12F, 12H, and 12J, and 12K and as provided by law,
5any of the public funds not currently needed for operating
6expenses and shall do so upon receipt of monthly notice from
7the director of the department of administrative services of
8the amount not so needed. In the event of loss on redemption
9or sale of securities invested as prescribed by law, and if
10the transaction is reported to the executive council, neither
11the treasurer nor director of the department of administrative
12services is personally liable but the loss shall be charged
13against the funds which would have received the profits or
14interest of the investment and there is appropriated from the
15funds the amount so required.
16 Sec. 2. NEW SECTION. 12K.1 Legislative findings and intent.
17The general assembly is deeply concerned over the increased
18prevalence of investing based on social and environmental
19factors, known as environmental, social, and governance
20investing, rather than pecuniary factors. Therefore, the
21general assembly intends to ensure that state funds and funds
22administered by the state, including public employee retirement
23funds, are protected from political influence detrimental to
24the financial health of the state and its citizens and promote
25the general assembly’s goal of protecting free enterprise.
26 Sec. 3. NEW SECTION. 12K.2 Definitions.
27As used in this chapter, unless the context otherwise
28requires:
291. “Boycott of certain companies” means, except as otherwise
30provided in chapters 12F, 12H, and 12J or without a reasonable
31business purpose, refusal to invest in a company, termination
32of business activities with a company, or another action that
33is intended to penalize, inflict economic harm on, or limit
34commercial relations with a company because the company does
35any of the following:
-1- 1a. Engages in, or does business with a company that engages
2in, the exploration, production, utilization, transportation,
3or sale of fossil fuel-based energy, timber, mining, or
4production agriculture.
5b. Engages in, or does business with a company that engages
6in, the manufacturing, distribution, sale, import, export, or
7lawful use of firearms, firearm parts, firearm accessories, or
8ammunition.
92. “Company” means any business or business entity, bank,
10national banking association, nonbank financial institution,
11financial services company, investment company, bank and trust
12company, trust company, savings and loan association, building
13and loan association, mutual savings bank, credit union, or
14savings bank, including a wholly owned subsidiary, majority-
15owned subsidiary, parent company, or affiliate of such business
16or business entity, that exists for the purpose of making a
17profit.
183. “Nonpecuniary social investment” means, except as
19otherwise provided in this chapter and chapters 12F, 12H,
20and 12J, investment or commitment of public funds to further
21environmental, social, governance, political, or ideological
22interests and for the purpose of obtaining an effect other than
23a maximized return to the public fund without a reasonable
24business purpose.
254. “Public entity” means the state, political subdivisions
26of the state, public school corporations, and all public
27officers, boards, commissions, departments, agencies, and
28authorities empowered by law to enter into public contracts for
29the expenditure of public funds, including the state board of
30regents and institutions under the control of the state board
31of regents. “Public entity” includes a public fund.
325. “Public fund” means the treasurer of state, the state
33board of regents, the public safety peace officers’ retirement
34system created in chapter 97A, the Iowa public employees’
35retirement system created in chapter 97B, the statewide fire
-2-1and police retirement system created in chapter 411, or the
2judicial retirement system created in chapter 602.
36. “Reasonable business purpose” means includes any purpose
4directly related to any of the following:
5a. Promoting the financial success or stability of a
6company.
7b. Mitigating risk to a company.
8c. Complying with legal or regulatory requirements.
9d. Limiting liability of a company.
107. “Scrutinized company” means any company that engages in
11nonpecuniary social investment on behalf of a public entity or
12a boycott of certain companies on behalf of a public entity.
138. “Scrutinized company list” means the list of scrutinized
14companies prepared, maintained, and published by a public fund
15pursuant to section 12K.3.
16 Sec. 4. NEW SECTION. 12K.3 Identification of scrutinized
17companies — notice.
181. a. By March 1, 2024, a public fund shall make its best
19efforts to identify or have identified any scrutinized company
20that the public fund has entered into a contract with to
21provide investment or management of securities services for the
22public fund. The public fund shall create and make available
23to the public a scrutinized company list for that public fund.
24The public fund shall review on an annual basis and update, if
25necessary, the scrutinized company list.
26b. In making its best efforts to identify or have identified
27a scrutinized company, the public fund shall consider and may
28rely upon any of the following information:
29(1) A company’s certification that it is not engaged
30in nonpecuniary social investment or a boycott of certain
31companies.
32(2) Publicly available information made by the company,
33including information that may be provided by nonprofit
34organizations, research firms, and international organizations,
35or publicly available statements by a member of a company’s
-3-1governing body, an executive director of a company, or any
2other officer or employee of the company with the authority to
3issue policy statements on behalf of the company.
4(3) Information published by the state or federal
5government.
6c. The Iowa public employees’ retirement system, acting
7on behalf of the system and other public funds subject to
8this section, may develop and issue a request for proposals
9for third-party services to complete the identification of
10any scrutinized company and the compilation of a scrutinized
11company list. The Iowa public employees’ retirement system
12shall consult with all other public funds on the development of
13the request for proposals. However, selection of a successful
14proposal and the final scope of services to be provided shall
15be determined only by those public funds that have agreed to
16utilize the third-party services. If more than one public fund
17decides to utilize the third-party services, the participating
18public funds shall equally share the costs of such services.
192. a. For each company on the scrutinized company list, the
20public fund shall send or have sent a written notice informing
21the company of its status as a scrutinized company and that
22it may become subject to contract termination with the public
23fund.
24b. If, following notice as provided by this section, a
25company ceases activity that designates it as a scrutinized
26company and submits a written statement to the public fund that
27it has ceased engaging in nonpecuniary social investment or a
28boycott of certain companies, the company shall be removed from
29the scrutinized company list.
30 Sec. 5. NEW SECTION. 12K.4 Public funds — contract and
31investment requirements.
321. A public fund shall not enter into a contract with a
33company to provide investment or management of securities
34services to the public fund so long as such company remains on
35the public fund’s scrutinized company list as provided in this
-4-1chapter or if the company would engage in nonpecuniary social
2investment or a boycott of certain companies on behalf of the
3public fund.
42. a. In accordance with sound investment criteria and
5consistent with fiduciary obligations, a public fund shall
6terminate a contract to provide investment or management
7of securities services with a company on the public fund’s
8scrutinized company list, so long as the company remains on
9that list, within eighteen months following the first written
10notice sent to the scrutinized company as required by section
1112K.3.
12b. This subsection shall not be construed to require the
13premature or otherwise imprudent termination of a contract, but
14any termination of a contract shall be completed as provided
15by this subsection.
16 Sec. 6. NEW SECTION. 12K.5 Reports.
171. Scrutinized companies list. Each public fund shall,
18within thirty days after the scrutinized company list is
19created or updated as required by section 12K.3, make the list
20available to the public.
212. Annual report. On October 1, 2024, and each October
221 thereafter, each public fund shall make available to the
23public, and file with the general assembly, an annual report
24covering the prior fiscal year that includes the following:
25a. The scrutinized company list as of the end of the fiscal
26year.
27b. A summary of all written notices sent as required by
28section 12K.3 during the fiscal year.
29c. All contracts terminated as provided in section 12K.4
30during the fiscal year.
31 Sec. 7. NEW SECTION. 12K.6 Public entities — contract
32requirements.
33A public entity shall not enter into a contract of one
34thousand dollars or more with a scrutinized company included on
35a scrutinized company list created by a public fund pursuant
-5-1to section 12K.3 for services including but not limited to the
2investment or management of securities in which any public
3funds are invested.
4 Sec. 8. NEW SECTION. 12K.7 Public funds — legal
5obligations.
61. With respect to actions taken in compliance with this
7chapter, including all good-faith determinations regarding
8companies as required by this chapter, the public fund shall
9be immune from any liability and exempt from any conflicting
10statutory or common law obligations, including any such
11obligations in respect to choice of asset managers, investment
12funds, or investments for the public fund’s securities
13portfolios.
142. This chapter shall not limit the ability of a public fund
15to terminate the contract of an investment manager or other
16vendor at any time and for any reason in the exercise of the
17public fund’s fiduciary duties.
18 Sec. 9. Section 35A.13, subsection 4, paragraph a, Code
192023, is amended to read as follows:
20a. Notwithstanding subsection 5, moneys in the fund, except
21so much of the fund as may be necessary to be kept on hand
22for the making of disbursements under this section, shall
23be invested by the treasurer of state, in consultation with
24the commission and the public retirement systems committee
25established by section 97D.4, in any investments authorized for
26the Iowa public employees’ retirement system in section 97B.7A,
27including common stock, and subject to the requirements of
28chapters 12F, 12H, and 12J, and 12K, and the earnings therefrom
29shall be credited to the fund. The treasurer of state may
30execute contracts and agreements with investment advisors,
31consultants, and investment management and benefit consultant
32firms in the administration of investments of moneys in the
33fund.
34 Sec. 10. Section 97A.7, subsection 1, Code 2023, is amended
35to read as follows:
-6- 11. The board of trustees shall be the trustees of the
2retirement fund created by this chapter as provided in section
397A.8 and shall have full power to invest and reinvest funds
4subject to the terms, conditions, limitations, and restrictions
5imposed by subsection 2 and chapters 12F, 12H, and 12J, and
612K and subject to like terms, conditions, limitations, and
7restrictions said trustees shall have full power to hold,
8purchase, sell, assign, transfer, or dispose of any of the
9securities and investments of the retirement fund which have
10been invested, as well as of the proceeds of said investments
11and any moneys belonging to the retirement fund. The board
12of trustees may authorize the treasurer of state to exercise
13any of the duties of this section. When so authorized the
14treasurer of state shall report any transactions to the board
15of trustees at its next monthly meeting.
16 Sec. 11. Section 97B.4, subsection 5, Code 2023, is amended
17to read as follows:
185. Investments. The system, through the chief investment
19officer, shall invest, subject to chapters 12F, 12H, and 12J,
20and 12K and in accordance with the investment policy and
21goal statement established by the board, the portion of the
22retirement fund which, in the judgment of the system, is not
23needed for current payment of benefits under this chapter
24subject to the requirements of section 97B.7A.
25 Sec. 12. Section 262.14, unnumbered paragraph 1, Code 2023,
26is amended to read as follows:
27The board may invest funds belonging to the institutions,
28subject to chapters 12F, 12H, and 12J, and 12K and the
29following regulations:
30 Sec. 13. Section 411.7, subsection 1, Code 2023, is amended
31to read as follows:
321. The board of trustees is the trustee of the fire
33and police retirement fund created in section 411.8 and
34shall annually establish an investment policy to govern the
35investment and reinvestment of the moneys in the fund, subject
-7-1to the terms, conditions, limitations, and restrictions
2imposed by subsection 2 and chapters 12F, 12H, and 12J, and
312K. Subject to like terms, conditions, limitations, and
4restrictions the system has full power to hold, purchase, sell,
5assign, transfer, or dispose of any of the securities and
6investments in which the fund has been invested, as well as of
7the proceeds of the investments and any moneys belonging to the
8fund.
9 Sec. 14. Section 602.9111, subsection 1, Code 2023, is
10amended to read as follows:
111. So much of the judicial retirement fund as may not be
12necessary to be kept on hand for the making of disbursements
13under this article shall be invested by the treasurer of
14state in any investments authorized for the Iowa public
15employees’ retirement system in section 97B.7A and subject to
16the requirements of chapters 12F, 12H, and 12J, and 12K, and
17the earnings therefrom shall be credited to the fund. The
18treasurer of state may execute contracts and agreements with
19investment advisors, consultants, and investment management and
20benefit consultant firms in the administration of the judicial
21retirement fund.
22EXPLANATION
23The inclusion of this explanation does not constitute agreement with
24the explanation’s substance by the members of the general assembly.
25This bill creates new Code chapter 12K, which restricts
26public funds, defined as the treasurer of state, the state
27board of regents, the Iowa public employees’ retirement system
28(IPERS), the public safety peace officers’ retirement system,
29the statewide fire and police retirement system, and the
30judicial retirement system, and public entities, defined to
31include a public fund and the state and political subdivisions
32of the state, from generally entering into a contract with
33certain companies engaged in nonpecuniary social investment or
34a boycott of certain companies.
35The bill defines “boycott of certain companies” as, without
-8-1a reasonable business purpose or as otherwise required under
2Code chapters 12F, 12H, and 12J, to take any adverse action to
3penalize or limit business opportunities for companies engaging
4or doing business with fossil fuel-based energy, timber,
5mining, production agriculture, firearms, firearm parts,
6firearm accessories, or ammunition companies. “Nonpecuniary
7social investment” is defined to mean, except as otherwise
8provided in new Code chapter 12K in this bill and Code chapters
912F, 12H, and 12J, investment or commitment of public funds
10to further environmental, social, governance, political, or
11ideological interests without a reasonable business purpose.
12The bill also defines “scrutinized company” as any company that
13engages in nonpecuniary social investment on behalf of a public
14entity or a boycott of certain companies on behalf of a public
15entity.
16Concerning public funds, the bill requires each public fund
17to develop and maintain a list of scrutinized companies that
18the public fund has entered into a contract with to provide
19investment or management of securities services for the public
20fund. Each public fund shall determine this list by March 1,
212024, and update it on an annual basis. Once a company is
22listed on the scrutinized companies list of a public fund, the
23bill requires the public fund to send a notice to that company
24relative to the requirements of the bill, to include notice
25that the company may qualify for termination of a contract for
26investment or management of securities services by the public
27fund.
28New Code section 12K.4 requires that a public fund shall
29not enter into a contract with a company to provide investment
30or management of securities services to the public fund of a
31company on the public fund’s most recent scrutinized company
32list or of a company that would engage in nonpecuniary social
33investment or boycott of certain companies on behalf of the
34public fund. If the public fund has a contract for investment
35services with a scrutinized company, the public fund shall
-9-1proceed to terminate the contract with that company in 18
2months, as applicable, so long as the company remains a
3scrutinized company.
4The bill further requires each public fund to prepare
5and make available to the public, and file with the general
6assembly, an annual report, beginning October 1, 2024,
7concerning actions taken by the public fund relative to the
8requirements of new Code chapter 12K in the previous fiscal
9year.
10New Code section 12K.6 provides that a public entity shall
11not enter into a contract of $1,000 or more with a scrutinized
12company included on a scrutinized company list for services
13including but not limited to the investment or management of
14securities in which any public funds are invested.
15The bill further provides that with respect to actions
16taken in compliance with the bill, including all good-faith
17determinations regarding companies as required, the public
18fund shall be immune from any liability and exempt from any
19conflicting statutory or common law obligations, including
20any such obligations in respect to choice of asset managers,
21investment funds, or investments for the public fund. In
22addition, the bill provides that the requirements of the bill
23shall not limit the ability of a public fund to terminate
24any contract of an investment manager or other vendor in the
25exercise of the public fund’s fiduciary duties.
26The bill makes conforming changes to Code sections 12.8,
2735A.13, 97A.7, 97B.4, 262.14, 411.7, and 602.9111.
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