Text of NE LB 743 (2024)

LEGISLATURE OF NEBRASKA ONE HUNDRED EIGHTH LEGISLATURE FIRST SESSION LEGISLATIVE BILL 743 Introduced by Kauth, 31. Read first time January 18, 2023 Committee: A BILL FOR AN ACT relating to public funds; to adopt the Investment 1 Neutrality in Public Funds Act. 2 Be it enacted by the people of the State of Nebraska, 3 LB743 2023 LB743 2023 -1- Section 1. Sections 1 to 5 of this act shall be known and may be 1 cited as the Investment Neutrality in Public Funds Act. 2 Sec. 2. For purposes of the Investment Neutrality in Public Funds 3 Act: 4 (1) Fiduciary includes the governing body of a political subdivision 5 acting as an investment manager or proxy advisor; 6 (2) Fiduciary commitment means any evidence of a fiduciary's purpose 7 in managing assets as a fiduciary, including any of the following in a 8 fiduciary's capacity as a fiduciary: 9 (a) Advertising, statements, explanations, reports, letters to 10 clients, communications with portfolio companies, statements of 11 principles, or commitments; or 12 (b) Participation in, affiliation with, or status as a signatory to, 13 any coalition, initiative, joint statement of principles, or agreement; 14 and 15 (3)(a) Financial means having been prudently determined by a 16 fiduciary to have a material effect on the financial risk or the 17 financial return of an investment; and 18 (b) Financial does not include any action taken, or factor 19 considered, by a fiduciary with any purpose whatsoever to further social, 20 political, or ideological interests. 21 Sec. 3. (1) In making and supervising investments of any public 22 fund, any investment manager, fiduciary, governing body, or financial 23 institution shall discharge his, her, or its duties solely in the 24 financial interest of the beneficiaries for the exclusive purposes of: 25 (a) Providing financial benefits to such beneficiaries; and 26 (b) Defraying reasonable expenses relating to administration of such 27 benefits. 28 (2) A fiduciary shall take into account only financial factors when 29 discharging its duties with respect to investments of public funds. 30 (3) All shares held directly or indirectly that contain public funds 31 LB743 2023 LB743 2023 -2- shall be voted solely in the financial interest of the beneficiaries of 1 such shares. 2 (4) Unless no economically practicable alternative is available, any 3 investment manager, fiduciary, governing body, or financial institution 4 that manages shares that contain public funds shall not grant proxy 5 voting authority to any person, unless that person has a practice of 6 acting solely upon financial factors and commits in writing to act solely 7 upon financial factors. 8 (5) Unless no economically practicable alternative is available, 9 assets containing public funds shall not be entrusted to a fiduciary 10 unless that fiduciary has a practice of, and in writing commits to, 11 following guidelines, when engaging with portfolio companies and voting 12 shares or proxies, to act solely upon financial factors. 13 (6) Unless no economically practicable alternative is available, any 14 investment manager, fiduciary, governmental entity, or financial 15 institution shall not adopt a practice of following the recommendations 16 of a proxy advisor or other service provider, unless such advisor or 17 service provider has a practice of acting solely upon financial factors 18 and commits in writing to act solely upon financial factors. 19 (7) All proxy votes shall be tabulated and reported annually to the 20 State Treasurer. For each vote, the report shall contain a vote caption, 21 the plan's vote, the recommendation of company management, and, if 22 applicable, the proxy advisor's recommendation. These reports shall be 23 posted on a publicly available webpage on the website of the State 24 Treasurer. 25 Sec. 4. A fiduciary may reasonably be determined to have taken an 26 action, or considered a factor, with a purpose to further social, 27 political, or ideological interests based upon evidence indicating such a 28 purpose, including any fiduciary commitment to further, through portfolio 29 company engagement, board, or shareholder votes, or otherwise as a 30 fiduciary, any of the following beyond what controlling federal or state 31 LB743 2023 LB743 2023 -3- law requires: 1 (1) Eliminating, reducing, offsetting, or disclosing greenhouse gas 2 emissions; 3 (2) Instituting or assessing corporate board, or employment, 4 composition, compensation, or disclosure criteria that incorporates 5 characteristics protected in this state under the Nebraska Fair 6 Employment Practice Act; 7 (3) Divesting from, limiting investment in, or limiting the 8 activities or investments of, any company, for failing, or not 9 committing, to meet environmental standards or disclosures; 10 (4) Access to abortion, sex or gender change, or transgender 11 surgery; or 12 (5) Divesting from, limiting investment in, or limiting the 13 activities or investments of, any company, for engaging in, facilitating, 14 or supporting the manufacture, distribution, sale, or use of firearms. 15 Sec. 5. (1) The Investment Neutrality in Public Funds Act, or any 16 contract subject to the act, may be enforced by the Attorney General. 17 (2) If the Attorney General has reasonable cause to believe that a 18 person has engaged in, is engaging in, or is about to engage in a 19 violation of the Investment Neutrality in Public Funds Act, the Attorney 20 General may: 21 (a) Require such person to file on such forms the Attorney General 22 prescribes a statement, or report in writing, under oath, as to all the 23 facts and circumstances concerning the violation and other data and 24 information as the Attorney General deems necessary; 25 (b) Examine under oath any person in connection with the violation; 26 (c) Examine any record, book, document, account, or paper as the 27 Attorney General deems necessary; and 28 (d) Pursuant to an order of the district court, impound any record, 29 book, document, account, paper, or sample or material relating to such 30 practice and retain possession of the same until the completion of all 31 LB743 2023 LB743 2023 -4- proceedings undertaken under the Investment Neutrality in Public Funds 1 Act or in the courts. 2 LB743 2023 LB743 2023 -5-