215.4725 Prohibited investments by the State Board of Administration; companies that boycott Israel.—
(1) DEFINITIONS.—As used in this section, the term:
(a) “Boycott Israel” or “boycott of Israel” means refusing to deal, terminating business activities, or taking other actions to limit commercial relations with Israel, or persons or entities doing business in Israel or in Israeli-controlled territories, in a discriminatory manner. A statement by a company that it is participating in a boycott of Israel, or that it has initiated a boycott in response to a request for a boycott of Israel or in compliance with, or in furtherance of, calls for a boycott of Israel, may be considered by the State Board of Administration to be evidence that a company is participating in a boycott of Israel. The term includes taking adverse action, including changes to published commercial financial ratings, risk ratings, and controversy ratings based on nonpecuniary factors, to inflict economic harm on Israel or persons or entities doing business in Israel or in Israeli-controlled territories. The term includes trade practices that are prohibited by federal regulations issued in compliance with 50 U.S.C. s. 4842 and does not include trade practices that are preempted by federal law.
(b) “Company” means a sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company, or other entity or business association, including all wholly owned subsidiaries, majority-owned subsidiaries, and parent companies, that exists for the purpose of making profit.
(c) “Direct holdings” in a company means all securities of that company that are held directly by the public fund or in an account or fund in which the public fund owns all shares or interests.
(d) “Indirect holdings” in a company means all securities of that company that are held in a commingled fund or other collective investment, such as a mutual fund, in which the public fund owns shares or interests, together with other investors not subject to this section or which are held in an index fund.
(e) “Public fund” means all funds, assets, trustee, and other designates under the State Board of Administration pursuant to part I of chapter 121.
(f) “Scrutinized companies” means companies that boycott Israel or engage in a boycott of Israel.
(2) IDENTIFICATION OF COMPANIES.—
(a) The public fund shall make its best efforts to identify all scrutinized companies in which the public fund has direct or indirect holdings or could possibly have such holdings in the future. Such efforts include:
1. To the extent that the public fund finds it appropriate, reviewing and relying on publicly available information regarding companies that boycott Israel, including information provided by nonprofit organizations, research firms, international organizations, and government entities;
2. Contacting asset managers contracted by the public fund for information regarding companies that boycott Israel; or
3. Contacting other institutional investors that prohibit such investments or that have engaged with companies that boycott Israel.
(b) By the first meeting of the public fund following the identification of scrutinized companies in accordance with paragraph (a), the public fund shall compile and make available the “Scrutinized Companies that Boycott Israel List.”
(c) The public fund shall update and make publicly available quarterly the Scrutinized Companies that Boycott Israel List based on evolving information from, among other sources, those listed in paragraph (a).
(3) REQUIRED ACTIONS.—The public fund shall adhere to the following procedures for assembling companies on the Scrutinized Companies that Boycott Israel List.
(a) Engagement.—
1. The public fund shall immediately determine the companies on the Scrutinized Companies that Boycott Israel List in which the public fund owns direct or indirect holdings.
2. For each company newly identified under this paragraph, the public fund shall send a written notice informing the company of its scrutinized company status and that it may become subject to investment prohibition or divestment by the public fund. The notice must inform the company of the opportunity to clarify its activities regarding the boycott of Israel and encourage the company to cease the boycott of Israel within 90 days in order to avoid qualifying for investment prohibition or divestment.
3. If, within 90 days after the public fund’s first engagement with a company pursuant to this paragraph, the company ceases a boycott of Israel, the company shall be removed from the Scrutinized Companies that Boycott Israel List, and the provisions of this section shall cease to apply to that company unless that company resumes a boycott of Israel.
(b) Divestment.—
1. If, after 90 days following the public fund’s first engagement with a company pursuant to paragraph (a), the company continues to boycott Israel, the public fund must sell, redeem, divest, or withdraw all publicly traded securities of the company from the public fund within 12 months after the company’s most recent appearance on the Scrutinized Companies that Boycott Israel List.
2. If a company that ceased a boycott of Israel following engagement pursuant to paragraph (a) resumes such activities, this paragraph immediately applies, and the public fund must send a written notice to the company. The company must also be immediately reintroduced onto the Scrutinized Companies that Boycott Israel List, as applicable.
(c) Prohibition.—The public fund is prohibited from acquiring securities of companies on the Scrutinized Companies that Boycott Israel List, except as provided in paragraph (d) and subsection (6).
(d) Excluded securities.—Notwithstanding this section, paragraphs (b) and (c) do not apply to:
1. Indirect holdings. However, the public fund shall submit letters to the managers of such investment funds containing companies that boycott Israel requesting that they consider removing such companies from the fund or create a similar fund having indirect holdings devoid of such companies. If the manager creates a similar fund, the public fund shall replace all applicable investments with investments in the similar fund in an expedited timeframe consistent with prudent investing standards. For the purposes of this section, an alternative investment, as the term is defined in s. 215.4401, and securities that are not publicly traded are deemed to be indirect holdings.
2. Exchange-traded funds.
(4) REPORTING.—
(a) The public fund shall file a report with each member of the Board of Trustees of the State Board of Administration, the President of the Senate, and the Speaker of the House of Representatives which includes the Scrutinized Companies that Boycott Israel List within 30 days after the list is created. This report shall be made available to the public.
(b) At each quarterly meeting of the Board of Trustees thereafter, the public fund shall file a report, which shall be made available to the public and to each member of the Board of Trustees of the State Board of Administration, the President of the Senate, and the Speaker of the House of Representatives, which includes:
1. A summary of correspondence with companies engaged by the public fund under subsection (3);
2. All investments sold, redeemed, divested, or withdrawn in compliance with paragraph (3)(b);
3. All prohibited investments under paragraph (3)(c);
4. Any progress made under paragraph (3)(d); and
5. A list of all publicly traded securities held directly by the public fund.
(5) INVESTMENT POLICY STATEMENT OBLIGATIONS.—The public fund’s actions taken in compliance with this section, including all good faith determinations regarding companies as required by this act, shall be adopted and incorporated into the public fund’s investment policy statement as provided in s. 215.475.
(6) INVESTMENT AND REINVESTMENT IN CERTAIN SCRUTINIZED COMPANIES.—Notwithstanding any other provision of this section, the public fund may invest in, cease divestment from, or reinvest in certain scrutinized companies if clear and convincing evidence shows that the value of all assets under management by the public fund becomes equal to or less than 99.50 percent, or 50 basis points, of the hypothetical value of all assets under management by the public fund, assuming no investment prohibition or divestment for any company had occurred under subsection (3). Cessation of the investment prohibition or the divestment, or reinvestment or any new investment, in a scrutinized company is limited to the minimum steps necessary to avoid the contingency described in this subsection. For any cessation of the investment prohibition or divestment, or reinvestment or new investment authorized by this subsection, the public fund shall provide a written report to each member of the Board of Trustees of the State Board of Administration, the President of the Senate, and the Speaker of the House of Representatives in advance of the cessation of investment prohibition or the divestment, or reinvestment or new investment, updated semiannually thereafter as applicable, setting forth the reasons and justification, supported by clear and convincing evidence, for its decisions to cease the investment prohibition or divestment, or to reinvest in scrutinized companies.
History.—s. 1, ch. 2016-36; s. 18, ch. 2018-110; s. 4, ch. 2023-111.
