S.F. No. 4859 Summary

• Requires the State Board of Investment to develop and implement a sustainable investment policy that identifies sustainability factors affecting individual investments and overall fund performance.

• Mandates the board consider sustainability factors in investment decisions, including corporate governance, environmental impacts (with specific focus on 1.5-degree Celsius climate alignment), social factors, and human capital considerations.

• Requires investment managers to disclose how they consider sustainability factors before contract engagement and annually thereafter, with disclosures made publicly available within 30 days.

• Establishes climate risk assessment requirements by January 1, 2025, including identification of sustainable investment opportunities, transition assessments for high-impact sectors, and development of proxy voting guidelines recognizing climate change as a business and systemic risk.

• Clarifies that the board's fiduciary duty includes reasonable care, skill, prudence, and diligence when investing with sustainability considerations, and exempts financial institution time deposits and processing services from these requirements.