BILL NUMBER: SB 1632 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 13, 2004
INTRODUCED BY Senator Figueroa
FEBRUARY 20, 2004
An act to add Section 12334 7513.7
to the Government Code, relating to the Treasurer
public pension systems .
LEGISLATIVE COUNSEL'S DIGEST
SB 1632, as amended, Figueroa. Treasurer:
Public pension plan systems:
investments.
Existing law declares that the retirement boards of public pension
and retirement system have fiduciary responsibility over the assets
of the public pension or retirement systems.
This bill would require the public pensions systems within the
state to obtain specified information from a corporation if the stock
of the corporation is held by the system, as specified; to report to
the Legislature regarding that information; and to make that
information available to the public, except in certain circumstances.
The bill would make related findings and declarations.
Existing law requires the Treasurer to receive and keep moneys
belonging to the state and to provide specified periodic reports to
the Governor and the public. The Treasurer is an ex officio member
of the retirement boards of the Public Employees' Retirement System
and the State Teachers' Retirement System.
This bill would authorize the Treasurer to obtain specified
information from a corporation, if the stock of the corporation is
held by a public pension system in the state, or from an external
fund manager of a public pension system, as specified, and to
biannually report its findings regarding that information to the
public.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares as follows:
(a) California, as the sixth largest economy in the world,
attracts multinational corporations from throughout the globe and its
consumers and investors have tremendous influence on the environment
and public health worldwide.
(b) As the business activities of multinational corporations
extend across the globe, the practices of these corporations
increasingly affect the environment, public health, labor and human
rights of communities everywhere.
(c) Californians have little or no access to critical information
on corporate practices in California and abroad, as corporations
often are not required to publicly disclose their overseas
environmental, human rights, and labor practices, even if they are
employing practices that violate human rights or are harmful to
communities or the environment.
(d) The disclosure of relevant information, both financial and
nonfinancial, is central to the ability of consumers and shareholders
to make sound economic decisions. Studies increasingly show that
good management of environmental and social issues is linked to good
overall management practices.
(e) Current securities disclosure rules and the Securities and
Exchange Commission do not provide adequate instruction and
enforcement to ensure that companies disclose the full scope of
potential material risks and liabilities stemming from environmental
or social harms. Poor disclosure or lack of disclosure of social and
environmental risks and liabilities can constrain proper risk
analysis and threaten shareholder value.
(f) Fiduciaries who manage funds for public pension systems, such
as the Public Employees' Retirement System and the State Teachers'
Retirement System, need better and more comprehensive information
about corporate environmental and social practices in order to
evaluate a company's internal controls, financial risks, and earnings
potential.
SEC. 2. Section 12334 7513.7
is added to the Government Code, to read:
12334. (a) The Treasurer may
7513.7. (a) Each public pension system in the state shall
request the following information from any corporation described in
subdivision (b) not more often than once every six months:
(1) Whether the corporation does business in nations that have
been identified by the United States Department of State as
supporting terrorism.
(2) Whether the corporation does business with organizations that
the United States Department of State has identified as supporting
terrorism.
(3) Whether the corporation directly or indirectly uses or
benefits from slave or child labor.
(4) :
(1) Whether the corporation has adopted and monitors compliance
with international human rights standards, including the
International Labor Organization's Core Labor Principles, as
expressed in its Declaration on Fundamental Principles and Rights at
Work.
(2) Whether the corporation has been directly or
indirectly cited or penalized for public health
or human rights , environmental, employment, consumer
protection, or corruption-related violations abroad or
domestically and, if so, the cumulative value of the penalties.
(3) Whether the corporation has adopted an environmental
management system or is a member of CERES or the Global Reporting
Initiative, to ensure that its facilities, contractors, and key
subcontractors are environmentally responsible .
(b) This section shall apply to any corporation if the capital
stock of the corporation is held in the
within the internal equity index fund of an investment portfolio
of a the respective public pension
system in this state.
(c) The Treasurer may also request the information described in
subdivision (a) regarding a corporation described in subdivision (b)
from any external fund manager that manages an investment portfolio
for a public retirement system.
(d) Every six months, there shall be placed on file for public
inspection during business hours at the office of the Treasurer, and
on the Treasurer's Web site, a report by the Treasurer with respect
to the information, if any, gathered pursuant to this section during
the immediately preceding six months. . This section
does not apply to small businesses as defined by the Small Business
Administration.
(c) Each public pension system shall report to the Legislature
regarding the corporate information received pursuant to this section
and shall make that information available to the public by whatever
means the system deems feasible, including posting the information on
the system's Web site, unless to do so would be inconsistent with
the system's fiduciary duties to its members and retirees.
(d) Nothing in this section shall be construed to limit the
ability of a public pension system to execute its fiduciary duty,
including its ability to diversify investments, or to require any
public pension system to make any investment decision or to impose
different or additional criteria on existing or potential
investments.
(e) Any action taken by a public pension system with respect to a
corporation that fails to provide the information requested under
this section shall be consistent with the system's fiduciary duty to
act as a prudent investor.
(f) A corporation that submits information under this section that
it knows or should know is false or contains material
misrepresentations of fact may be subject to liability for damages or
equitable relief under applicable provisions of law.