Public employee retirement systems: prohibited investments: retailers and wholesalers of banned weapons.

The California Constitution grants the retirement board of a public employee retirement system plenary authority and fiduciary responsibility for investment of moneys and administration of the retirement fund and system. The California Constitution qualifies this grant of powers by reserving to the Legislature the authority to prohibit investments if it is in the public interest and the prohibition satisfies standards of fiduciary care and loyalty required of a retirement board. Existing law prohibits the board of administration of the Public Employees' Retirement System (PERS) from making investments in certain countries and in thermal coal companies, as specified, subject to the board's plenary authority and fiduciary responsibility for investment of moneys and administration of the system. Existing law requires the state to indemnify and hold harmless the present, former, and future board members, officers, and employees of PERS for investment decisions regarding specified business operations. This bill would require the board of administration of PERS, by July 1, 2019, to adopt an investment policy regarding companies that are retailers or wholesalers of banned weapons, based on a limited timeframe of engagement seeking the voluntary removal of banned weapons from the stock of items sold by these companies. The bill would require the board, if unsuccessful in persuading the governing board of a company to cease in the sale of banned weapons, to adopt a divestment action and divest from that company by no later than July 1, 2021. The bill would also require the board, if a company reinitiates the sale of banned weapons after voluntarily choosing to cease sales, to initiate action to divest within 60 days of that decision. The bill would not require the board to take any above-described action unless it determines that the action is consistent with its fiduciary responsibilities. The bill would specify that board members and other officers and employees would be indemnified and held harmless in connection with actions taken pursuant to the bill's requirements.