HB 2723

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Full Text of HB2723
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	HB2723 - 104th General Assembly
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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB2723
Introduced 2/6/2025, by Rep. Abdelnasser Rashid
SYNOPSIS AS INTRODUCED:
40 ILCS 5/1-110.16
Amends the General Provisions Article of the Illinois Pension Code. Removes provisions requiring the Illinois Investment Policy Board to include companies that boycott Israel in its list of restricted companies. Makes conforming changes. Effective immediately.
LRB104 06363 RPS 16399 b
A BILL FOR
		HB2723		LRB104 06363 RPS 16399 b
1    AN ACT concerning public employee benefits.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Pension Code is amended by
5changing Section 1-110.16 as follows:
6    (40 ILCS 5/1-110.16)
7    Sec. 1-110.16. Transactions prohibited by retirement
8systems; [companies that boycott Israel,] for-profit companies
9that contract to shelter migrant children, Iran-restricted
10companies, Sudan-restricted companies, expatriated entities,
11companies that are domiciled or have their principal place of
12business in Russia or Belarus, and companies that are subject
13to Russian Harmful Foreign Activities Sanctions.
14    (a) As used in this Section:
15        ["Boycott Israel" means engaging in actions that are ]
16    [politically motivated and are intended to penalize, ]
17    [inflict economic harm on, or otherwise limit commercial ]
18    [relations with the State of Israel or companies based in ]
19    [the State of Israel or in territories controlled by the ]
20    [State of Israel.]
21        "Company" means any sole proprietorship, organization,
22    association, corporation, partnership, joint venture,
23    limited partnership, limited liability partnership,
		HB2723	- 2 -	LRB104 06363 RPS 16399 b
1    limited liability company, or other entity or business
2    association, including all wholly owned subsidiaries,
3    majority-owned subsidiaries, parent companies, or
4    affiliates of those entities or business associations,
5    that exist for the purpose of making profit.
6        "Company that is subject to Russian Harmful Foreign
7    Activities Sanctions" means a company that is subject to
8    sanctions under the Russian Harmful Foreign Activities
9    Sanctions Regulations (31 CFR Part 587), any Presidential
10    Executive Order imposing sanctions against Russia, or any
11    federal directive issued pursuant to any such Executive
12    Order.
13        "Contract to shelter migrant children" means entering
14    into a contract with the federal government to shelter
15    migrant children under the federal Unaccompanied Alien
16    Children Program or a substantially similar federal
17    program.
18        "Direct holdings" in a company means all publicly
19    traded securities of that company that are held directly
20    by the retirement system in an actively managed account or
21    fund in which the retirement system owns all shares or
22    interests.
23        "Expatriated entity" has the meaning ascribed to it in
24    Section 1-15.120 of the Illinois Procurement Code.
25        "Illinois Investment Policy Board" means the board
26    established under subsection (b) of this Section.
		HB2723	- 3 -	LRB104 06363 RPS 16399 b
1        "Indirect holdings" in a company means all securities
2    of that company that are held in an account or fund, such
3    as a mutual fund, managed by one or more persons not
4    employed by the retirement system, in which the retirement
5    system owns shares or interests together with other
6    investors not subject to the provisions of this Section or
7    that are held in an index fund.
8        "Iran-restricted company" means a company that meets
9    the qualifications under Section 1-110.15 of this Code.
10        "Private market fund" means any private equity fund,
11    private equity funds of funds, venture capital fund, hedge
12    fund, hedge fund of funds, real estate fund, or other
13    investment vehicle that is not publicly traded.
14        "Restricted companies" means [companies that boycott ]
15    [Israel,] for-profit companies that contract to shelter
16    migrant children, Iran-restricted companies,
17    Sudan-restricted companies, expatriated entities,
18    companies that are domiciled or have their principal place
19    of business in Russia or Belarus, and companies that are
20    subject to Russian Harmful Foreign Activities Sanctions.
21        "Retirement system" means a retirement system
22    established under Article 2, 14, 15, 16, or 18 of this Code
23    or the Illinois State Board of Investment.
24        "Sudan-restricted company" means a company that meets
25    the qualifications under Section 1-110.6 of this Code.
26    (b) There shall be established an Illinois Investment
		HB2723	- 4 -	LRB104 06363 RPS 16399 b
1Policy Board. The Illinois Investment Policy Board shall
2consist of 7 members. Each board of a pension fund or
3investment board created under Article 15, 16, or 22A of this
4Code shall appoint one member, and the Governor shall appoint
54 members. The Governor shall designate one member of the
6Board as the Chairperson.
7    (b-5) The term of office of each member appointed by the
8Governor, who is serving on the Board on June 30, 2022, is
9abolished on that date. The terms of office of members
10appointed by the Governor after June 30, 2022 shall be as
11follows: 2 initial members shall be appointed for terms of 2
12years, and 2 initial members shall be appointed for terms of 4
13years. Thereafter, the members appointed by the Governor shall
14hold office for 4 years, except that any member chosen to fill
15a vacancy occurring otherwise than by expiration of a term
16shall be appointed only for the unexpired term of the member
17whom he or she shall succeed. Board members may be
18reappointed. The Governor may remove a Governor's appointee to
19the Board for incompetence, neglect of duty, malfeasance, or
20inability to serve.
21    (c) Notwithstanding any provision of law to the contrary,
22beginning January 1, 2016, Sections 1-110.15 and 1-110.6 of
23this Code shall be administered in accordance with this
24Section.
25    (d) By April 1, 2016, the Illinois Investment Policy Board
26shall make its best efforts to identify all Iran-restricted
		HB2723	- 5 -	LRB104 06363 RPS 16399 b
1companies and [,] Sudan-restricted companies[, and companies that ]
2[boycott Israel] and assemble those identified companies into a
3list of restricted companies, to be distributed to each
4retirement system.
5    These efforts shall include the following, as appropriate
6in the Illinois Investment Policy Board's judgment:
7        (1) reviewing and relying on publicly available
8    information regarding Iran-restricted companies and [,]
9    Sudan-restricted companies, [and companies that boycott ]
10    [Israel,] including information provided by nonprofit
11    organizations, research firms, and government entities;
12        (2) contacting asset managers contracted by the
13    retirement systems that invest in Iran-restricted
14    companies and [,] Sudan-restricted companies[, and companies ]
15    [that boycott Israel];
16        (3) contacting other institutional investors that have
17    divested from or engaged with Iran-restricted companies
18    and [,] Sudan-restricted companies[, and companies that ]
19    [boycott Israel]; and
20        (4) retaining an independent research firm to identify
21    Iran-restricted companies and [,] Sudan-restricted
22    companies[, and companies that boycott Israel].
23    The Illinois Investment Policy Board shall review the list
24of restricted companies on a quarterly basis based on evolving
25information from, among other sources, those listed in this
26subsection (d) and distribute any updates to the list of
		HB2723	- 6 -	LRB104 06363 RPS 16399 b
1restricted companies to the retirement systems and the State
2Treasurer.
3    By April 1, 2018, the Illinois Investment Policy Board
4shall make its best efforts to identify all expatriated
5entities and include those companies in the list of restricted
6companies distributed to each retirement system and the State
7Treasurer. These efforts shall include the following, as
8appropriate in the Illinois Investment Policy Board's
9judgment:
10        (1) reviewing and relying on publicly available
11    information regarding expatriated entities, including
12    information provided by nonprofit organizations, research
13    firms, and government entities;
14        (2) contacting asset managers contracted by the
15    retirement systems that invest in expatriated entities;
16        (3) contacting other institutional investors that have
17    divested from or engaged with expatriated entities; and
18        (4) retaining an independent research firm to identify
19    expatriated entities.
20    By July 1, 2022, the Illinois Investment Policy Board
21shall make its best efforts to identify all for-profit
22companies that contract to shelter migrant children and
23include those companies in the list of restricted companies
24distributed to each retirement system. These efforts shall
25include the following, as appropriate in the Illinois
26Investment Policy Board's judgment:
		HB2723	- 7 -	LRB104 06363 RPS 16399 b
1        (1) reviewing and relying on publicly available
2    information regarding for-profit companies that contract
3    to shelter migrant children, including information
4    provided by nonprofit organizations, research firms, and
5    government entities;
6        (2) contacting asset managers contracted by the
7    retirement systems that invest in for-profit companies
8    that contract to shelter migrant children;
9        (3) contacting other institutional investors that have
10    divested from or engaged with for-profit companies that
11    contract to shelter migrant children; and
12        (4) retaining an independent research firm to identify
13    for-profit companies that contract to shelter migrant
14    children.
15    No later than 6 months after the effective date of this
16amendatory Act of the 102nd General Assembly, the Illinois
17Investment Policy Board shall make its best efforts to
18identify all companies that are domiciled or have their
19principal place of business in Russia or Belarus and companies
20that are subject to Russian Harmful Foreign Activities
21Sanctions and include those companies in the list of
22restricted companies distributed to each retirement system.
23These efforts shall include the following, as appropriate in
24the Illinois Investment Policy Board's judgment:
25        (1) reviewing and relying on publicly available
26    information regarding companies that are domiciled or have
		HB2723	- 8 -	LRB104 06363 RPS 16399 b
1    their principal place of business in Russia or Belarus and
2    companies that are subject to Russian Harmful Foreign
3    Activities Sanctions, including information provided by
4    nonprofit organizations, research firms, and government
5    entities;
6        (2) contacting asset managers contracted by the
7    retirement systems that invest in companies that are
8    domiciled or have their principal place of business in
9    Russia or Belarus and companies that are subject to
10    Russian Harmful Foreign Activities Sanctions;
11        (3) contacting other institutional investors that have
12    divested from or engaged with companies that are domiciled
13    or have their principal place of business in Russia or
14    Belarus and companies that are subject to Russian Harmful
15    Foreign Activities Sanctions; and
16        (4) retaining an independent research firm to identify
17    companies that are domiciled or have their principal place
18    of business in Russia or Belarus and companies that are
19    subject to Russian Harmful Foreign Activities Sanctions.
20    (e) The Illinois Investment Policy Board shall adhere to
21the following procedures for companies on the list of
22restricted companies:
23        (1) For each company newly identified in subsection
24    (d), the Illinois Investment Policy Board, unless it
25    determines by an affirmative vote that it is unfeasible,
26    shall send a written notice informing the company of its
		HB2723	- 9 -	LRB104 06363 RPS 16399 b
1    status and that it may become subject to divestment or
2    shareholder activism by the retirement systems.
3        (2) If, following the Illinois Investment Policy
4    Board's engagement pursuant to this subsection (e) with a
5    restricted company, that company ceases activity that
6    designates the company to be an Iran-restricted company, a
7    Sudan-restricted company, [a company that boycotts Israel,]
8    an expatriated entity, or a for-profit company that
9    contracts to shelter migrant children, the company shall
10    be removed from the list of restricted companies and the
11    provisions of this Section shall cease to apply to it
12    unless it resumes such activities.
13        (3) For a company that is domiciled or has its
14    principal place of business in Russia or Belarus, if,
15    following the Illinois Investment Policy Board's
16    engagement pursuant to this subsection (e), that company
17    is no longer domiciled or has its principal place of
18    business in Russia or Belarus, the company shall be
19    removed from the list of restricted companies and the
20    provisions of this Section shall cease to apply to it
21    unless it becomes domiciled or has its principal place of
22    business in Russia or Belarus.
23        (4) For a company that is subject to Russian Harmful
24    Foreign Activities Sanctions, if, following the Illinois
25    Investment Policy Board's engagement pursuant to this
26    subsection (e), that company is no longer subject to
		HB2723	- 10 -	LRB104 06363 RPS 16399 b
1    Russian Harmful Foreign Activities Sanctions, the company
2    shall be removed from the list of restricted companies and
3    the provisions of this Section shall cease to apply to it
4    unless it becomes subject to Russian Harmful Foreign
5    Activities Sanctions.
6    (f) Except as provided in subsection (f-1) of this Section
7the retirement system shall adhere to the following procedures
8for companies on the list of restricted companies:
9        (1) The retirement system shall identify those
10    companies on the list of restricted companies in which the
11    retirement system owns direct holdings and indirect
12    holdings.
13        (2) The retirement system shall instruct its
14    investment advisors to sell, redeem, divest, or withdraw
15    all direct holdings of restricted companies from the
16    retirement system's assets under management in an orderly
17    and fiduciarily responsible manner within 12 months after
18    the company's most recent appearance on the list of
19    restricted companies.
20        (3) The retirement system may not acquire securities
21    of restricted companies.
22        (4) The provisions of this subsection (f) do not apply
23    to the retirement system's indirect holdings or private
24    market funds. The Illinois Investment Policy Board shall
25    submit letters to the managers of those investment funds
26    containing restricted companies requesting that they
		HB2723	- 11 -	LRB104 06363 RPS 16399 b
1    consider removing the companies from the fund or create a
2    similar actively managed fund having indirect holdings
3    devoid of the companies. If the manager creates a similar
4    fund, the retirement system shall replace all applicable
5    investments with investments in the similar fund in an
6    expedited timeframe consistent with prudent investing
7    standards.
8    (f-1) The retirement system shall adhere to the following
9procedures for restricted companies that are expatriated
10entities or for-profit companies that contract to shelter
11migrant children:
12        (1) To the extent that the retirement system believes
13    that shareholder activism would be more impactful than
14    divestment, the retirement system shall have the authority
15    to engage with a restricted company prior to divesting.
16        (2) Subject to any applicable State or Federal laws,
17    methods of shareholder activism utilized by the retirement
18    system may include, but are not limited to, bringing
19    shareholder resolutions and proxy voting on shareholder
20    resolutions.
21        (3) The retirement system shall report on its
22    shareholder activism and the outcome of such efforts to
23    the Illinois Investment Policy Board by April 1 of each
24    year.
25        (4) If the engagement efforts of the retirement system
26    are unsuccessful, then it shall adhere to the procedures
		HB2723	- 12 -	LRB104 06363 RPS 16399 b
1    under subsection (f) of this Section.
2    (f-5) Beginning on the effective date of this amendatory
3Act of the 102nd General Assembly, no retirement system shall
4invest moneys in Russian or Belarusian sovereign debt, Russian
5or Belarusian government-backed securities, any investment
6instrument issued by an entity that is domiciled or has its
7principal place of business in Russia or Belarus, or any
8investment instrument issued by a company that is subject to
9Russian Harmful Foreign Activities Sanctions, and no
10retirement system shall invest or deposit State moneys in any
11bank that is domiciled or has its principal place of business
12in Russia or Belarus. As soon as practicable after the
13effective date of this amendatory Act of the 102nd General
14Assembly, each retirement system shall instruct its investment
15advisors to sell, redeem, divest, or withdraw all direct
16holdings of Russian or Belarusian sovereign debt and direct
17holdings of Russian or Belarusian government-backed securities
18from the retirement system's assets under management in an
19orderly and fiduciarily responsible manner.
20    Notwithstanding any provision of this Section to the
21contrary, a retirement system may cease divestment pursuant to
22this subsection (f-5) if clear and convincing evidence shows
23that the value of investments in such Russian or Belarusian
24sovereign debt and Russian or Belarusian government-backed
25securities becomes equal to or less than 0.05% of the market
26value of all assets under management by the retirement system.
		HB2723	- 13 -	LRB104 06363 RPS 16399 b
1For any cessation of divestment authorized by this subsection
2(f-5), the retirement system shall provide a written notice to
3the Illinois Investment Policy Board in advance of the
4cessation of divestment, setting forth the reasons and
5justification, supported by clear and convincing evidence, for
6its decision to cease divestment under this subsection (f-5).
7    The provisions of this subsection (f-5) do not apply to
8the retirement system's indirect holdings or private market
9funds.
10    (g) Upon request, and by April 1 of each year, each
11retirement system shall provide the Illinois Investment Policy
12Board with information regarding investments sold, redeemed,
13divested, or withdrawn in compliance with this Section.
14    (h) Notwithstanding any provision of this Section to the
15contrary, a retirement system may cease divesting from
16companies pursuant to subsection (f) if clear and convincing
17evidence shows that the value of investments in such companies
18becomes equal to or less than 0.5% of the market value of all
19assets under management by the retirement system. For any
20cessation of divestment authorized by this subsection (h), the
21retirement system shall provide a written notice to the
22Illinois Investment Policy Board in advance of the cessation
23of divestment, setting forth the reasons and justification,
24supported by clear and convincing evidence, for its decision
25to cease divestment under subsection (f).
26    (i) The cost associated with the activities of the
		HB2723	- 14 -	LRB104 06363 RPS 16399 b
1Illinois Investment Policy Board shall be borne by the boards
2of each pension fund or investment board created under Article
315, 16, or 22A of this Code.
4    (j) With respect to actions taken in compliance with this
5Section, including all good-faith determinations regarding
6companies as required by this Section, the retirement system
7and Illinois Investment Policy Board are exempt from any
8conflicting statutory or common law obligations, including any
9fiduciary duties under this Article and any obligations with
10respect to choice of asset managers, investment funds, or
11investments for the retirement system's securities portfolios.
12    (k) It is not the intent of the General Assembly in
13enacting this amendatory Act of the 99th General Assembly to
14cause divestiture from any company based in the United States
15of America. The Illinois Investment Policy Board shall
16consider this intent when developing or reviewing the list of
17restricted companies.
18    (l) If any provision of this amendatory Act of the 99th
19General Assembly or its application to any person or
20circumstance is held invalid, the invalidity of that provision
21or application does not affect other provisions or
22applications of this amendatory Act of the 99th General
23Assembly that can be given effect without the invalid
24provision or application.
25    If any provision of Public Act 100-551 or its application
26to any person or circumstance is held invalid, the invalidity
		HB2723	- 15 -	LRB104 06363 RPS 16399 b
1of that provision or application does not affect other
2provisions or applications of Public Act 100-551 that can be
3given effect without the invalid provision or application.
4    If any provision of Public Act 102-118 or its application
5to any person or circumstance is held invalid, the invalidity
6of that provision or application does not affect other
7provisions or applications of Public Act 102-118 that can be
8given effect without the invalid provision or application.
9    If any provision of this amendatory Act of the 102nd
10General Assembly or its application to any person or
11circumstance is held invalid, the invalidity of that provision
12or application does not affect other provisions or
13applications of this amendatory Act of the 102nd General
14Assembly that can be given effect without the invalid
15provision or application.
16(Source: P.A. 102-118, eff. 7-23-21; 102-699, eff. 4-19-22;
17102-1108, eff. 12-21-22.)
18    Section 99. Effective date. This Act takes effect upon
19becoming law.