Bill H.4126

HOUSE DOCKET, NO. 3881 FILED ON: 1/17/2025

HOUSE . . . . . . . . . . . . . . . No. 4126

By Representative Uyterhoeven of Somerville, a petition (accompanied by bill, House, No. 4126) of Erika Uyterhoeven for legislation to align public pensions with Massachusetts’ net zero future. Public Service.

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Fourth General Court
(2025-2026)

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An Act to align public pensions with Massachusetts’ net zero future.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Chapter 29 of the General Laws is hereby amended by inserting after section 2JJJJJJ the following section:-

Section 2KKKKKK. (a) There shall be established and set up on the books of the commonwealth a separate fund known as the Economic and Workforce Transition Fund, hereinafter referred to as the fund. The fund shall: (i) support communities and workers impacted by the retirement of fossil fuel assets; and (ii) finance retraining programs and workforce development for jobs in clean energy and sustainable sectors. The fund shall be administered by the state treasurer.

(b) The fund shall be credited with: (i) revenue from appropriations or other money authorized by the general court and specifically designated to be credited to the fund; (ii) interest earned on money in the fund; and (iii) a 1 per cent of the pension reserves investment management board’s returns from climate-aligned investments as determined by the reasonably anticipated cost of such activities. Amounts credited to the fund shall not be subject to further appropriation and any money remaining in the fund at the end of a fiscal year shall not revert to the General Fund.

(c) The department shall annually, not later than December 31, report on the activity of the fund to the: (i) chairs of the joint committee on revenue; (ii) chairs of the house and senate committees on ways and means; and (iii) clerks of the house of representatives and senate.

SECTION 2. Chapter 32 of the General Laws is hereby amended by inserting after section 23B the following section:-

Section 23C. (a) For the purposes of section, the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Board”, the pension reserves investment management board.

“Changing circumstances”, emerging systemic risks, technological advances, evolving finance methodologies and regulatory changes that require adaptation in fiduciary decision-making.

“Climate risk”, material financial risks stemming from the physical impacts of climate change, transition to a low-carbon economy and systemic economic vulnerabilities.

“Commission”, the public employee retirement administration commission established under section 49 of chapter 7.

“Innovation in fiduciary practice”, a fiduciary duty, including the duty to respond to circumstances then prevailing, and so requires the adoption of forward-looking investment strategies and tools to address systemic risks, foster sustainable returns and align with changing economic and environmental realities.

“Intergenerational loyalty”, the fiduciary duty to balance the needs of current and future beneficiaries equally, ensuring long-term sustainability without compromising future financial security.

“Net zero”, a state where greenhouse gas emissions are balanced by removals or offsets, consistent with the commonwealth’s climate goals and the Paris Agreement’s 1.5 degrees Celsius target.

(b)(1) Fiduciaries managing public pension funds shall: (i) integrate climate risk, systemic economic vulnerabilities and long-term sustainability into investment decisions; (ii) act with intergenerational loyalty, balancing the needs of current and future beneficiaries; and (iii) respond to changing circumstances by adapting investment strategies and exploring innovative approaches.

(2) Fiduciaries managing public pension funds shall prioritize investments that: (i) align with the commonwealth’s net zero by 2050 goals; (ii) reduce exposure to stranded assets and transition risks; and (iii) promote climate solutions and sustainable economic development.

(c)(1) Fiduciaries managing public pension funds shall: (i) adopt stewardship finance investment tools and strategies that help mitigate systemic risks and foster long-term resilience as appropriate for an investor of like character and aims; and (ii) document efforts to identify and seize opportunities in sustainable and regenerative industries, including diversified sources of investment methodologies including, but not limited to, direct investment, project finance and exchange-traded asset management.

(2) Fiduciaries managing public pension funds shall prepare an annual innovation report detailing actions taken to align investments with net zero goals and changing market dynamics. Fiduciaries managing public pension funds shall submit the annual innovation reports, not later than December 1st to the commission, and the reports shall be made publicly available.

(d) The commission shall: (i) monitor compliance with this section, including the board’s alignment with net zero goals and integration of climate risk, innovation and intergenerational loyalty; (ii) review and approve annual reports from fiduciaries detailing progress on emissions reductions, divestment and reallocation efforts; and (iii) conduct independent audits of pension funds to assess compliance with fiduciary standards.

(e) Noncompliance with this section shall be referred to the attorney general, who shall: (i) ensure fiduciary compliance and (ii) pursue legal remedies, including penalties and actions against pension fiduciaries for persistent noncompliance.

(f) Beneficiaries to public pension may: (i) file formal complaints with to the commission regarding noncompliance with net zero obligations; and (ii) access public disclosures of public pension fund progress and compliance reports.

(g) Public pension funds shall adopt a net zero investment framework that includes: (i) divestment from companies in high-emitting and high-impact sectors that lack credible transition plans; (ii) reallocation of capital toward climate-aligned investments in renewable energy,

sustainable infrastructure and green technology; and (iii) interim targets for portfolio emissions reductions by years 2030, 2040 and 2050.

(h) Fiduciaries managing public pension funds shall submit annual climate transition plan reports to the commission detailing: (i) progress on divestment and reallocation efforts; (ii) portfolio-wide emissions data, including scope 1, 2 and 3 emissions; and (iii) strategies for engaging portfolio companies to meet net zero goals.

(i) Fiduciaries managing public pension funds shall implement the requirements of this section within 12 months of its enactment.

(j) The commission shall issue guidance and final rules for compliance within 6 months of the enactment of this section.

(k) Programs for innovation in fiduciary practices shall commence within 18 months of the enactment of this section.

Name:	District/Address:	Date Added:
Erika Uyterhoeven	27th Middlesex	1/17/2025