Bill
Number: H.B. 2637
Fann Floor Amendment
Reference
to: APPROPRIATIONS
Committee amendment
Amendment
drafted by: Leg Council
FLOOR
AMENDMENT EXPLANATION
1. Removes the financial
institution prohibition and the related Legislative intent.
2. Removes the requirement
for:
a) any investment manager
to attest that the investment manager does not hold any environmental, social
or governance-related investments; and
b)
the
State Treasurer to certify that the investment managers do not hold investments
in environmental, social or governance-related products.
3. Defines plan as
any plan, fund or program established or maintained by the state or a political
subdivision of the state to do any of the following:
a) provide retirement
income or other retirement benefits to employees or former employees;
b) defer income by
employees for a period of time extending to the termination of covered
employment or beyond; or
c)
invest
taxpayer monies for any purpose.
4. Requires a fiduciary to
discharge the fiduciary's duties with respect to a plan solely in the interest
of the participants and beneficiaries of the plan for the exclusive purpose of:
a) providing pecuniary
benefits to the participants and their beneficiaries;
b) defraying reasonable
expenses of administering the plan; and
c)
earning
a return on the investment.
5. Requires a fiduciary to
take into account only pecuniary factors when evaluating an investment or
discharging the fiduciary's duties with respect to a plan.
6. Outlines plan voting of
ownership interests and proxy voting.
7. Prohibits a plan from
entrusting any plan assets to a fiduciary that has a practice of:
a) engaging with, or
commits to engage with, a company based on nonpecuniary factors; or
b)
voting
shares based on nonpecuniary factors.
8. Prohibits a fiduciary
from adopting a practice of following the recommendations of a proxy advisory
firm or other service provided unless the proxy advisory firm's or the service
provider's proxy voting guidelines are consistent with the fiduciary's
obligation to act based only on pecuniary factors.
9. Defines fiduciary,
nonpecuniary factor and pecuniary factor.
10. Makes technical and conforming changes.
Page 1, strike lines 2 through 20
Page 2, strike lines 1 through 8
Renumber to conform
Lines 11 and
12, strike "; voting shares"
Line 17,
after "b." strike remainder of line
Strike lines
18 through 21
Line 22,
strike "investments in environmental, social or governance-related
products."
Line 28,
after "factors" insert "as
prescribed in title 35, chapter 2, article 10"
Strike lines
31 and 32
Page 3,
strike lines 1 through 3, insert:
"Sec. 2. Title
35, chapter 2, Arizona Revised Statutes, is amended by adding article 10, to
read:
ARTICLE
10. GOVERNMENT INVESTMENTS PROTECTION ACT
START_STATUTE35-394. Definitions
In
this article, unless the context otherwise requires:
1. "Fiduciary"
means a person who does any of the following:
(a) exercises
any discretionary authority or discretionary control with respect to A plan or
exercises any authority or control managing or disposing of the plan's assets.
(b) renders
investment advice for a fee or other compensation, directly or indirectly, with
respect to any monies or other property of A plan or has the authority or
responsibility to render investment advice.
(c) has
any discretionary authority or discretionary responsibility in administering A
plan.
2. "Nonpecuniary
factor" includes Any factor that is intended to further or is branded,
advertised or otherwise publicly described by The offeror or FIDUCIARY as
furthering any of the following:
(a) international,
domestic or industry agreements relating to environmental or social goals.
(b) corporate
governance structures based on social characteristics.
(c) social
or environmental goals.
3. "Pecuniary
factor" means a factor that has a material effect on the financial risk or
the financial return of an investment based on appropriate investment horizons
consistent with A plan's investment objectives and funding policy.
4. "Plan"
means any plan, fund or program that is established or maintained by this State
or a political subdivision of this state, including a university under the
jurisdiction of the Arizona board of regents and a community college district
as defined in section 15-1401, to
do any of the following:
(a) Provide
retirement income or other retirement benefits to employees or former
employees.
(b) defer
income by employees for A period of time extending to the termination of
covered employment or beyond.
(c) invest
taxpayer monies for any purpose. END_STATUTE
START_STATUTE35-394.01. Plans;
fiduciaries; duties
A. A
fiduciary shall discharge The fiduciary's duties with respect to a plan solely
in the interest of the participants and beneficiaries of the plan for the
exclusive purpose of providing pecuniary benefits to the participants and their
beneficiaries, defraying reasonable expenses of administering the plan and
earning a return on the investment.
B. A
fiduciary must take into account only pecuniary factors when evaluating an
investment or discharging the fiduciary's duties with respect to a
plan. A fiduciary may not take into account any nonpecuniary or
other factors when evaluating an investment. END_STATUTE
START_STATUTE35-394.02. Plans;
voting of ownership interests
A. Only
the governmental entity that establishes or maintains a plan may vote the
shares held by the plan. A governmental entity may not grant proxy voting
authority to any person who is not a part of the governmental entity unless
that person follows guidelines consistent with the governmental entity's
obligation to act based only on pecuniary factors.
B. The
shares held directly or indirectly by a plan shall be voted only in the
pecuniary interest of the plan. The shares may not be voted to further
nonpecuniary, environmental, social, political, ideological or other benefits
or goals. A plan may not entrust any plan assets to a fiduciary
that:
1. has
a practice of engaging with, or COMMITS to engaging with, a company based on
nonpecuniary factors.
2. has
a practice of voting shares based on nonpecuniary factors.
C. A
fiduciary may not adopt a practice of following the recommendations of a proxy
advisory firm or other service provider unless The proxy advisory firm's or the
service provider's proxy voting guidelines are consistent with the fiduciary's
obligation to act based only on pecuniary factors."END_STATUTE
Amend title to conform