Over the past several years, private investors have recognized the financial risk of investing in unfriendly nations without a strong tradition of the rule of law. Further, the risks of investing in foreign nations—particularly those with anti-democratic and autocratic inclinations—can shift rapidly and dramatically based on geopolitical changes.
 
For example, many companies lost substantial holdings in Russia after its invasion of Ukraine in 2022, whether the company had withdrawn voluntarily or had its asset seized. Disputes about trade policy between the United States and China have led American firms to shift some of their investments elsewhere.
 
The Commonwealth has already taken some steps to respond to these risks. The State Treasurer has recently withdrawn State Treasury investments in assets in China. And the General Assembly has explicitly required public fund divestiture from entities doing business in Sudan and Iran (Act 44 of 2010) and Russian and Belarusian entities (Act 132 of 2022).
 
I will soon be introducing legislation to require the consideration of such risks as part of the investment review process undertaken by the State Treasury and the Commonwealth’s pension funds, which total more than $150 billion. This will ensure geopolitical risks are considered before public investments are made, rather than waiting until after the situation changes. Further, this legislation will require the public funds to provide an annual report to the General Assembly outlining investments in foreign nations.
 
I look forward to working with you on this important legislation.