RETIREMENT SYSTEMS (SECTIONS 105.688 AND 105.692)

The act prohibits modifies the responsibilities of investment fiduciaries. Specifically, investment fiduciaries are required to:

· Not consider environmental, social, or governance characteristics in a manner that would override his or her fiduciary duties;

· Not be subject to any legislative, regulatory, or other mandates to invest with environmentally, socially, or other noneconomically motivated influence unless they are consistent with the fiduciary's responsibility or as provided in the system's governing statutes with respect to the investment of system assets or other duties imposed by law relating to the investment, management, deposit, or custody of system assets; and

· Not be subject to any legislative, regulatory, or other mandates for divestment from any indirect holdings in actively or passively managed investment funds or in private assets.

All shares of common stock held directly by a retirement system shall be voted solely in the economic interest of plan participants. Voting shares for the purposes of furthering noneconomic environmental, social, political, ideological, or other goals is prohibited. The act creates provisions on proxy voting for such purposes.

These provisions are identical to HB 769 (2023).

MUNICIPAL GREEN BONDS (SECTION 108.371)

The act creates new provisions relating to municipal bonds. Specifically, for a municipal bond issued in this state to be rated, certified, or validated as a green bond, at least 85% of the bond proceeds shall be used for eligible green projects, as that term is defined in the act. The interest on and income from a municipal bond that is rated, certified, or validated as a green bond shall be exempt from income taxation by this state unless such bond is issued to finance a project by a private entity.

The State Auditor may conduct an audit of municipal green bonds issued by a municipality to review whether such bonds comply with the requirements of this section for being rated, certified, or validated as a green bond. The state auditor may conduct such audit at the state auditor's discretion and shall conduct such audit in the same manner as the state auditor conducts other similar audits under chapter 29.

If a review of a municipal green bond determines that less than eighty-five percent of the bond proceeds were or are being used for eligible green projects, the green bond rating, certification, or validation on such municipal bond shall be void, the exemption from state income taxation provided under subsection 3 of this section for the interest on and income from such municipal bond shall be void, and the bond holder may recoup the amount of such taxes from the issuer of the bond.

To protect municipal green bond holders and provide moneys for such bond holders to recoup the amount of taxes as provided in subsection 4 of this section, a municipality that issues a municipal green bond shall establish a green bond holder protection fund separate from the municipality's debt service reserve fund or equivalent fund. The amount maintained in the green bond holder protection fund shall be equal to at least the amount of interest to be paid each year on such municipal green bond multiplied by the top state income tax rate.

BROKER-DEALER AND INVESTMENT ADVISORS (SECTIONS 409.115 AND 409.117)

If a broker-dealer or agent, as such terms are defined in the act, incorporates a social objective or other nonfinancial objective into a discretionary investment decision to buy or sell a security or commodity for a customer, a recommendation or solicitation to a customer for the purchase or sale of a security or commodity, or the selection, recommendation or advice to a customer regarding the selection of a third-party manager or subadviser to manage the investments in the customer's account, then such broker-dealer or agent shall disclose to such customer the existence of such incorporation.

Furthermore, if an investment adviser or investment adviser representative, as such terms are defined in the act, incorporates a social objective or other nonfinancial objective into a discretionary investment decision to buy or sell a security or commodity for a client, advice or a recommendation to a client for the purchase or sale of a security or commodity, or the selection, or advice or a recommendation to a client regarding the selection, of a third-party manager or subadviser to manage the investments in the client's account such investment adviser or investment adviser representative shall disclose to such client the existence of such incorporation.

These provisions are similar to HCS/HB 824 (2023).

SCOTT SVAGERA