Fiscal Summary

Increase State Expenditures - Exceeds $200,000/One-Time/TCRS Exceeds $100,000/Recurring/TCRS Other Fiscal Impact - In the event a company does boycott Israel and a governmental entity would have otherwise contracted with such company, there may be an increase in state or local expenditures associated with procurement of goods or services. Any such impact cannot be reasonably determined.

Bill Summary

This bill prohibits state agencies and political subdivisions of the state (governmental entities) from contracting with companies that boycott Israel; requires the Tennessee consolidated retirement system (TCRS) to divest direct holdings in companies that boycott Israel; and requires the state treasurer to maintain a list of such companies.

This bill:

(1) Prohibits a governmental entity from entering into a contract with a company for goods or services unless the contract contains a written verification from the company that it does not boycott Israel and will not boycott Israel during the term of the contract;

(2) Requires the state treasurer to prepare and maintain, and provide to the members of the council on pensions and insurance, a list of all companies that boycott Israel. In maintaining the list, the treasurer may review and rely, as appropriate in the treasurer's judgment, on publicly available information regarding companies, including information provided by this state, nonprofit organizations, research firms, international organizations, and governmental entities. This bill provides certain protection and immunity for the treasurer, TCRS board of trustees and employees for actions taken in compliance with these provisions, including all good faith determinations regarding companies and with respect to making investments, divesting from any investment, preparing or maintaining any list of companies, or choosing asset managers, investment funds, or investments for the securities portfolios of TCRS.

This bill allows the treasurer and any officers, directors, board members, or employees of TCRS to rely on a company's response to a notice or communication made under this bill without conducting any further investigation, research, or inquiry.

The treasurer must update the list annually or more often as the treasurer considers necessary, but not more often than quarterly. No later than 30 days after the date the list of companies that boycott Israel is first provided or updated, the treasurer must submit the list to the speaker of the senate, the speaker of the house, the governor, and the attorney general and reporter, and post the list on a publicly available website.

No later than 30 days after the date the treasurer prepares or updates the list, the treasurer must notify the members of the council on pensions and insurance of the listed companies in which TCRS owns direct holdings or indirect holdings. For each listed company identified on the list, the treasurer must send a written notice informing the company of its status as a listed company and warning the company that it may become subject to divestment by the treasurer. This bill details the process for a company to dispute its inclusion on the list or cease its boycott and be removed from the list.

If the company continues to boycott Israel, the treasurer will sell, redeem, divest, or withdraw all publicly traded securities of the company, except certain securities described in this bill. This bill details a schedule that the treasurer will follow when selling, redeeming, divesting, or withdrawing publicly traded securities of a company continuing to boycott Israel, and establishes other requirements regarding the schedule and deviations from the schedule.

This bill also details the process for the treasure to cease divesting from a company, and specifies that the treasurer may go through that process if:

(1) The treasurer has suffered or will suffer a loss in the hypothetical value of all assets under management by the treasurer as a result of having to divest from listed companies under this chapter; or
(2) An individual portfolio that uses a benchmark-aware strategy would be subject to an aggregate expected deviation from its benchmark as a result of having to divest from listed companies.

This bill specifies that the treasurer is not required to divest from any indirect holdings in actively or passively managed investment funds or private equity funds.

Under this bill, no later than January 5 of each year, the treasurer must file a publicly available report with the speaker of the senate, the speaker of the house of representatives, the governor, and the attorney general and reporter that identifies, among other things, all securities sold, redeemed, divested, or withdrawn in compliance with this bill; and all prohibited investments under this bill.

This bill authorizes the attorney general and reporter to bring any action necessary to enforce this bill.