SB 827 - This act creates new provisions restricting the use of social objective scoring standards and the investment of state funds and retirement funds based on social objective scoring standards.INVESTMENT OF STATE FUNDS (Section 30.260)
Current law requires the State Treasurer to prepare, maintain, and adhere to a written investment policy. This act requires such policy to include provisions prohibiting the investment of state funds in any particular investment held by any entity that prioritizes a social objective or other nonfinancial objective into its discretionary business or investment decisions.
This provision is similar to a provision in SB 815 (2024).
PUBLIC CONTRACTS (Section 34.715)
The act requires public bodies to ensure that bidders, offerors, contractors, or subcontractors, when engaged in procuring or letting contracts for any purpose, are not given preferential treatment or discriminated against based on an environmental, social and governance score or based on the prioritization or lack of prioritization of any socially responsible criteria by the bidder, offeror, contractor, or subcontractor.
This provision is similar to a provision in SB 815 (2024), SB 1142 (2024), SB 1350 (2024), SB 50 (2023), SB 177 (2023), SB 316 (2023), and SB 1171 (2022).
RETIREMENT SYSTEMS (Sections 105.688 and 105.692)
The act 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 1937 (2024), provisions in HCS/SS/SB 898 (2024), HB 769 (2023), and provisions in HCS/HB 863 (2023) and substantially similar to SB 1113 (2024).
INVESTMENT-ADVISERS AND BROKER-DEALERS (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 identical to provisions in HCS/HB 863 (2023) and similar to HB 2799 (2024) and HCS/HB 824 (2023).
SCOTT SVAGERA