Public Act 101-0473, the Illinois Sustainable Investing Act (ISIA), took effect on January 1, 2020, and requires:

  1. Every "public agency"1 and "governmental unit'2 to develop, publish and implement sustainable investment policies3 applicable to the management of all "public funds"4 under its control; and

  2. Every public agency to prudently integrate "sustainability factors"5 into its investment decision-making, investment analysis, portfolio construction, due diligence and investment ownership in order to maximize financial returns, minimize projected risks and more effectively execute its fiduciary duty.

The ISIA also amended the Deposit of State Moneys Act, the Public Funds Investment Act and the Illinois Pension Code6 to require related, otherwise required investment policies to include material, relevant and decision-useful sustainability factors to be considered, including (without limitation) corporate governance and leadership factors, environmental factors, social capital factors, human capital factors and business model and innovation factors as provided under the ISIA.


1. Defined in section 10 of ISIA as follows:

"Public agency" means the State of Illinois, the various counties, townships, cities, towns, villages, school districts, educational service regions, special road districts, public water supply districts, fire protection districts, drainage districts, levee districts, sewer districts, housing authorities, the Illinois Bank Examiners' Education Foundation, the Chicago Park District and all other political corporations or subdivisions of the State of Illinois, now or hereafter created, whether herein specifically mentioned or not.

2. Defined in section 10 of ISIA as follows:

"Governmental unit" has the same meaning as in the Local Government Debt Reform Act.

3. Required under section 15 of ISIA to include "material, relevant, and decision-useful sustainability factors to be considered by the public agency or governmental unit as one component of its overall evaluation of investment decisions. Such factors may include, but are not be limited to: (1) corporate governance and leadership factors; (2) environmental factors; (3) social capital factors; (4) human capital factors; and (5) business model and innovation factors."

4. Defined in section 10 of ISIA as follows:

"Public funds" means current operating funds, special funds, interest and sinking funds and funds of any kind or character belonging to or in the custody of any public agency.

5. Defined in section 10 of ISIA as follows:

"Sustainability factors" means factors that may have a material and relevant financial impact on the safety or performance of an investment and which are complementary to financial factors and financial accounting. 

6. Importantly, the amendment to the Illinois Pension Code includes "within the bounds of financial and fiduciary prudence" as a limitation, which effectively means that sustainable factors may only be considered in connection with an investment to the extent the "sustainable" investment option is as least as good (on normal economic and performance criteria) as other options available.

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