new text begin [11A.28] SUSTAINABLE INVESTING.
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new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the terms defined in this
subdivision have the meanings given, unless the context clearly indicates another meaning
is intended.
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new text begin (b) "Financial institution" means a bank, savings bank, or credit union established under
state law, another state's law, or federal law.
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new text begin (c) "Investment decision-making" means investment analysis, security and fund selection,
portfolio construction, due diligence, selection and retention of external investment managers,
and investment stewardship activities, including proxy voting.
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new text begin (d) "Investment manager" means an individual or entity that has the power to manage,
acquire, or dispose of any fund asset and is:
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new text begin (1) registered as an investment adviser under the federal Investment Advisers Act of
1940, United States Code, title 15, section 80b;
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new text begin (2) a bank, as defined under the federal Investment Advisers Act of 1940; or
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new text begin (3) an insurance company authorized to transact business in this state.
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new text begin (e) "Investment policy" means a written investment policy that addresses the safety of
principal, the liquidity of funds, investment stewardship, the return on an investment, and
providing sufficient liquidity to pay any obligations.
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new text begin (f) "Sustainability factor" means a factor that may have a financial impact on the safety
or performance of a fund and that supplements traditional financial accounting factors.
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new text begin Subd. 2. new text end

new text begin Development of sustainable investment policy. new text end

new text begin (a) By no later than
........................., the state board must develop, publish, and implement a sustainable
investment policy to manage the fund. The sustainable investment policy may be incorporated
in existing investment policies developed, published, and implemented by the state board.
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new text begin (b) A sustainable investment policy must identify any sustainability factor that may
impact the performance of individual investments and any sustainability factor that may
impact the performance of the fund as a whole. The state board must consider the
sustainability investment policy when evaluating any investment decision. A sustainability
factor may include a factor related to:
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new text begin (1) corporate governance and leadership;
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new text begin (2) the environment;
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new text begin (3) social capital; and
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new text begin (4) human capital.
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new text begin Subd. 3. new text end

new text begin Consideration of sustainability factors in investment decision-making. new text end

new text begin (a)
By no later than ........................., the state board must prudently consider sustainability
factors that may impact the performance of individual investments and any sustainability
factors that the board identifies under subdivision 2 that may impact the performance of the
fund as a whole when making investment decisions to maximize financial returns, minimize
risk, and effectively execute the board's fiduciary duty.
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new text begin (b) Depending on the investment or asset class, sustainability factors may include the
following:
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new text begin (1) corporate governance and leadership factors that may impact the performance of an
investment or the fund as a whole, such as the independence of boards and auditors, the
qualifications and diversity of corporate directors and executives, risk management and
oversight practices, executive compensation structures, transparency and reporting, regulatory
and legal compliance, governance and disclosure of political and lobbying expenditures,
shareholder rights, and ethical conduct;
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new text begin (2) environmental factors that may impact the performance of an investment or the fund
as a whole, such as greenhouse gas emissions, air quality, energy management, water and
wastewater management, waste and hazardous materials management, and the impact on
nature and biodiversity. Environmental factors include any specific company environmental
commitments, including the strength of targets and whether the targets align with the goal
of limiting global temperature rise to 1.5 degrees Celsius above preindustrial levels, the
credibility of energy transition plans, and the quality of climate risk disclosure;
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new text begin (3) social factors that impact relationships with key stakeholders, such as customers,
local communities, the public, and the government, and that may impact the performance
of an investment or the fund as a whole. Social factors include human rights, customer
welfare, customer privacy, data security, the social impact of technology, access to and
affordability of basic needs such as health care and housing, selling practices and product
labeling, tax practices, the impact of company business and other activities on racial and
gender inequality and public health, community reinvestment, incorporating stakeholder
interests into energy transition plans, and community relations;