Bill Summary – FastDemocracy

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68th Legislature 2023                                                                                                 HB 228.1
                                                 HOUSE BILL NO. 228
     INTRODUCED BY T. MOORE, T. MCGILLVRAY, D. LENZ, F. MANDEVILLE, J. TREBAS, S. VINTON, N.
    DURAM, B. MERCER, L. BREWSTER, S. GIST, S. ESSMANN, C. SPRUNGER, T. FALK, L. HELLEGAARD
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  A BILL FOR AN ACT ENTITLED: “AN ACT REVISING PUBLIC INVESTMENTS BY PROHIBITING THE
  CONSIDERATION OF NONPECUNIARY FACTORS; PROVIDING DEFINITIONS; PROVIDING
  ENFORCEMENT BY THE ATTORNEY GENERAL; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE.”
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  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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          NEW SECTION. Section 1.         Definitions. For the purposes of [sections 1 through 3]:
          (1)      (a) "Material" means a risk or return regarding which there is a substantial likelihood that a
  reasonable investor would attach importance when:
          (i)      evaluating the potential financial return and financial risks of an existing or prospective
  investment; or
          (ii)     exercising, or declining to exercise, any rights appurtenant to securities.
          (b)      When used to qualify a risk or return, the term does not include furthering nonpecuniary,
  environmental, social, governance, or other similarly oriented considerations, or any portion of a risk or return
  that primarily relates to events that involve a high degree of uncertainty regarding what may or may not occur in
  the distant future and are systemic, general, or not investment-specific in nature.
          (2)      "Nonpecuniary" includes any action taken or factor considered by a fiduciary with any purpose
  to further environmental, social, governance, or other similarly oriented considerations.
          (3)      (a) "Pecuniary factor" means a factor that has a material effect on the financial risk or financial
  return of an investment based on appropriate investment horizons consistent with the plan's investment
  objectives and funding policy.
          (b)      The term does not include nonpecuniary factors.
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          NEW SECTION. Section 2.         Consideration of nonpecuniary factors prohibited. (1) The evaluation
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68th Legislature 2023                                                                                               HB 228.1
  by the board of investments or the evaluation or exercise of any right appurtenant to an investment must take
  into account only pecuniary factors.
           (2)      Environmental, social, governance, or other similarly oriented considerations are pecuniary
  factors only if they present economic risks or opportunities that qualified investment professionals would treat
  as material economic considerations under generally accepted investment theories. The weight given to those
  factors must solely reflect a prudent assessment of their impact on risk and return.
           (3)      The board, when considering environmental, social, governance, or other similarly oriented
  factors as pecuniary factors, is also required to examine the level of diversification, the degree of liquidity, and
  the potential risk-return in comparison with other available investment alternatives that would play a similar role
  in their plans' portfolios.
           (4)      Any pecuniary consideration of environmental, social, governance, or other similarly oriented
  factors must necessarily include evaluating whether greater returns can be achieved through investments that
  rank poorly on these factors.
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           NEW SECTION. Section 3.        Voting ownership interests. (1) All shares held directly or indirectly by
  or on behalf of the board must be voted solely in the pecuniary interest of the beneficiaries of the funds.
           (2)      Voting to further nonpecuniary, environmental, social, governance, or other similarly oriented
  considerations is prohibited.
           (3)      The board may not follow the recommendations of a proxy advisory firm or other service
  providers unless the firm or service provider commits to follow proxy voting guidelines that are consistent with
  the board's obligation to act based solely on pecuniary factors unless no economically practicable alternative is
  available.
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           NEW SECTION. Section 4.        Enforcement by attorney general. The attorney general may bring an
  action in the appropriate Montana district court to prevent or restrain violations of [sections 1 through 3].
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           NEW SECTION. Section 5.        Codification instruction. [Sections 1 through 4] are intended to be
  codified as an integral part of Title 17, chapter 6, part 2, and the provisions of Title 17, chapter 6, part 2, apply
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68th Legislature 2023                                                                                                   HB 228.1
  to [sections 1 through 4].
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          NEW SECTION. Section 6.          Severability. If a part of [this act] is invalid, all valid parts that are
  severable from the invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications,
  the part remains in effect in all valid applications that are severable from the invalid applications.
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          NEW SECTION. Section 7.          Effective date. [This act] is effective on passage and approval.
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