Committee on Finance

Ordinance
WHEREAS, in conjunction with its fduciary obligation, the City of Chicago shall consider the
behavior of the companies it invests in, and encourage practices that are environmentally
friendly, socially responsible, and which promote good governance; and
WHEREAS, the City Council has a responsibility to protect the well-being of our city and its
residents against the serious threat posed by climate change. In answer to that responsibility, the
City shall establish a carbon neutral investment portfolio by 2020 through evaluation of existing
investment, and seek to avoid future investment, in the fossil fuel industry and those who extract
and produce fossil fuels, and prioritizing investment in green and sustainable energy production;
and
WHEREAS, the City of Chicago, through its investments seeks to create a more equitable, just
corporate eco-system and world by considering labor rights, employee diversity, corporate social
responsibility, and human rights and ethics; and
WHEREAS, through investing in companies with responsible corporate governance, the City of
Chicago intends to promote sound and representative management practices by considering
governance factors such as leadership structure, executive compensation, human capital
management, transparency and disclosure, and shareholder rights; and
WHEREAS, the City of Chicago, through its investments in various industries and companies,
are exposed to the risks incurred by companies through their corporate environmental, social
responsibility, and governance policies, strategies and behaviors that can potentially impact the
sustainability of returns in its portfolio on behalf of its residents and taxpayers; now, therefore
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CHICAGO:
SECTION 1. Chapter 2-32-520 of the Municipal Code of Chicago are hereby amended
by deleting the language stricken through and by inserting the underscored language, as follows:
2-32-520 Authorized investments.
The Comptroller and Treasurer jointly shall have authority to use any and all funds in the City
treasury which are set aside for use for particular purposes and not immediately necessary for
such purposes, for the purchase of the following classes of investments:
(Omitted text is unaffected by this ordinance)
(d) Commercial paper which: (1) at the time of purchase, is rated in the two highest
classifications by at least two one accredited ratings agencies agency; and (2) matures not more
than 270 days after the date of purchase;
(e) Reverse repurchase agreement Repurchase and reverse repurchase agreements if: (1) the
term does not exceed 90 days; (2) the maturity of the investment acquired with the proceeds of
the repurchase or reverse repurchase agreement does not exceed the expiration date of the
repurchase or reverse repurchase agreement; and (3) at the time of purchase, the total amount of
the repurchase or reverse repurchase agreements held in all funds does not exceed 50 percent of
the total holdings across all funds. Repurchase and rReverse repurchase agreements may be

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transacted with primary dealers and financial institutions, provided that the City has on file a
master repurchase agreement;
(f) Certificates of deposit of banks or savings and loan associations designated as municipal
depositories which are insured by federal deposit insurance; provided that any amount of the
deposit in excess of the federal deposit insurance shall be either: (1) fully collateralized at least
102 percent by: (i) marketable United States government securities marked to market at least
monthly; (ii) bonds, notes, or other securities constituting the direct and general obligation of any
agency or instrumentality of the United States; or (iii) bonds, notes or other securities
constituting a direct and general obligation of any county, township, city, village, incorporated
town, municipal corporation, or school district, of the State of Illinois, of any other state, or of
any political subdivision or agency of the State of Illinois or of any other state which are rated in
either the AAA or AA rating categories by at least one two accredited ratings agenciesy and
maintaining such rating during the term of such investment; or (2) secured by a corporate surety
bond issued by an insurance company licensed to do business in Illinois and having a claimspaying rating in the top rating category as rated by a nationally recognized statistical rating
organization and maintaining such rating during the term of such investment; or (3) fully
collateralized at least 102 percent by an irrevocable letter of credit issued in favor of the City of
Chicago by the Federal Home Loan Bank, provided that the Federal Home Loan Bank's shortterm debt obligations are rated in the highest rating category by at least one accredited ratings
agency throughout the term of the certificate of deposit;
(g) Bankers acceptance of banks whose senior obligations, at the time of purchase, are rated
in either the AAA or AA rating categories by at least one two accredited ratings agencyies;
(Omitted text is unaffected by this ordinance)
(l) (1) Bonds of companies organized in the United States with assets exceeding
$1,000,000,000 that, at the time of purchase, are rated not less than two ratings above investment
grade A-, or equivalent rating, by at least one two accredited ratings agencyies. Investments
authorized by this subsection (1) shall, at the time of purchase, not exceed 35 50 percent of the
total holdings across all funds (with no more than 35 percent of the total portfolio authorized by
this subsection (l)(1) invested in any one market sector, out of a total market sector pool
consisting of finance, energy, technology, consumer products, manufacturing, healthcare and
transportation) and the with a stated maturity shall not to exceed 430 years;
(2) Bonds authorized by subsection (l)(1) where the principal is guaranteed with underlying
assets such as bonds speculative instruments, specifically currencies and commodities. Bonds
authorized by this subsection (l)(2) shall, at the time of purchase, not exceed 5 percent of the
total holdings across all funds;
(m) Debt instruments of international financial institutions, including but not limited to the
World Bank and the International Monetary Fund, that, at the time of purchase, are rated within 4
intermediate credit ratings of the United States sovereign credit rating by at least one two
accredited ratings agencyies, but not less than an A- rating, or equivalent rating. Investments
authorized by this subsection (m) shall, at the time of purchase, not exceed 10 35 percent of the
total holdings across all the funds, including principal and interest, and the stated maturity shall
not exceed 10 40 years. For purposes of this subsection (m), an “international financial
institution” means a financial institution that has been established or chartered by more than one
country and the owners or shareholders are generally national governments or other international
institutions such as the United Nations;

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(n) United States dollar denominated debt instruments of foreign sovereignties, subsovereignties, and supra-sovereignties that, at the time of purchase, are rated within 4
intermediate credit ratings of the United States sovereign credit rating by at least one two
accredited ratings agenciesy, but not less than an A-rating or equivalent rating. The investments
authorized by this subsection (n) shall, at the time of purchase, not exceed 35 percent of the total
holdings across all funds, and the maturity shall not exceed 430 years;
(o) Interest-bearing bonds of any county, township, city, village, incorporated town, municipal
corporation, or school district, of the State of Illinois, of any other state, or of any political
subdivision or agency of the State of Illinois or of any other state, whether the interest earned
thereon is taxable or tax-exempt under federal law. The bonds shall be registered in the name of
the City or held under a custodial agreement at a bank. The bonds shall be rated, at the time of
purchase, not less than A-, or equivalent rating, by at least two accredited rating agencies with
nationally recognized expertise in rating bonds of states and their political subdivisions. The
bonds authorized by this subsection shall, at the time of purchase: (1) not have a maturity of
more than 430 years from the date of purchase; and (2) not exceed 35 25 percent of the total
holdings across all funds; provided that bonds linked to infrastructure projects shall not exceed 35
percent of the total holdings across all funds;
(p) Bonds registered and regulated by the Securities and Exchange Commission and for which
the full faith and credit of the State of Israel is pledged for payment; provided that the bonds
have an A-rating or above or equivalent rating by at least one two accredited ratings agenciesy.
The bonds authorized by this subsection (p) shall, at the time of purchase, not exceed 1 percent
of the total holdings across all funds, and the maturity shall not exceed 430 years;
(q) Bonds, notes, debentures, or other similar obligations of agencies of the United States
rated, at the time of purchase, no less than AAA by at least one two accredited rating agenciesy;
(r) Interests in the CCCF as established by Section 2-32-622 of this Code that inure to the
benefit of neighborhood economic development and which, in the aggregate, generate returns
that are commensurate with the City's overall investment portfolio returns; provided that the
amount of City funds invested in interests in the CCCF pursuant to this subsection shall not
exceed the limits specified in Section 2-32-622(e) of this Code.
(Omitted text is unaffected by this ordinance)
(2) Commencing in 2020, in each year, Eligible Funds may be transferred to the CCCF from
time to time, provided that the aggregate amount of such transfers during a year shall not exceed
the Annual Limit for such year.
All securities so purchased, excepting the bonds authorized in subsection (o), investments
authorized in subsection (r) and tax anticipation warrants, municipal bonds, notes, commercial
paper or other instruments representing a debt obligation of the City purchased under subsection
(c), shall show on their face that they are fully payable as to principal and interest, where
applicable, if any, within 430 years from the date of purchase.
Except as provided in subsection (l)(2), neither the Comptroller nor Treasurer shall have
authority, without the approval of the City Council, to (i) invest in financial agreements whose
returns are linked to or derived from the performance of some underlying asset such as bonds,
currencies or commodities, or (ii) borrow against or otherwise obligate City investments for the
purpose of investment, other than for purposes of a security lending transaction conducted under
Section 2-32-575.

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SECTION 2. A new Chapter 2-32-521 of the Municipal Code of Chicago is hereby
added by inserting the underscored language, as follows:
2-32-521 Environmental, Social, and Governance Investments
Consistent with achieving the investment objectives of the Treasurer set forth herein, and in an
effort to contribute to and encourage more sustainable, ethical, and accountable corporate
behaviors, the Treasurer’s office shall consider the environmental, social, and governance (ESG)
practices of the entities it seeks to invest in as part the corporate securities portfolio as defined in
subsections (L)(1) and 2-32-520(d) herein. This Policy shall be implemented and maintained
pursuant to the following and incorporated into the Treasurer’s office Investment Policy
Statement:
(a) The Treasurer’s office shall fully integrate and apply ESG factors as components of
investment decision-making in its corporate bonds portfolio. These factors shall include, but are
not limited to:
(1) Environmental: Through investing in companies that prioritize conservation and
sustainable business practices, the City Treasurer’s Office (CTO) will endeavor to protect our
environment for future generations. As such, the CTO shall, at minimum, incorporate and
consider the following environmental factors: (i) carbon footprint; (ii) energy consumption; (iii)
water and waste; (iv) external conservation initiatives; and (v) sector-specific adjustments;
(2) Social Factors: Through investing in companies that promote a better quality of life for
all of us, the City Treasurer’s Office (CTO) will help create a more equitable, just corporate ecosystem and world. As such, the CTO shall, at minimum, incorporate and consider the following
social factors: (i) labor rights; (ii) employee diversity; (iii) corporate social responsibility; and
(iv) human rights and ethics;
(3) Corporate Governance Factors: Through investing in companies with strong corporate
governance, the City Treasurer’s Office (CTO) will help promote sound and representative
management practices. As such, the CTO shall, at minimum, incorporate and consider the
following governance factors: (i) leadership structure; (ii) executive compensation; (iii) human
capital management; (iv) transparency and disclosure; and (v) shareholder rights;
(b) The Treasurer’s office shall administer the oversight of investment holdings to encourage
the advancement of ESG through engagement with entities such as funds, companies,
government bodies, and other organizations and to move the marketplace toward more socially
responsible investment practices;
(c) The Treasurer’s office shall consider the long-term sustainability and regulatory risks in
addition to the current return environment in investment decision-making. The Treasurer shall
develop criteria for socially responsible investing that may pertain to particular industries and
entities;
(d) In order to achieve carbon neutrality by 2020, the Treasurer's office shall seek to offset
existing investments in the top 200 publicly-owned coal, oil, and gas reserve owners, ranked by
the carbon emissions embedded in their reserves, with socially responsible investments
consistent with this policy. These alternate investments may include, but are not limited to: (1)
U.S. Green Bonds; (2) Sub-Sovereigns and Supra Sovereign Investments;
(e) The City of Chicago shall become a signatory of the United Nations Principles for
Responsible Investment (UNPRI) and maintain good standing through adherence to the
principles therein to the extent permitted by law and subject to availability of appropriated funds;

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(f) The Treasurer’s office shall maintain a minimum ESG portfolio rating of investment grade
or higher;
(g) The Treasurer’s office shall conduct on-going assessment of the ESG factors herein to
ensure the factors are relevant to the Treasurer’s investment portfolio, the evolving marketplace,
and industry best practices;
(h) The Treasurer’s office shall review and update the ESG policy annually to ensure
consistency with the changing definition of socially responsible investing, and issue an annual
report to the City Council on its compliance with the foregoing policy within 30 days of issuance
of the City of Chicago’s Comprehensive Annual Financial Report (CAFR).
SECTION 3. Chapter 2-32-525 of the Municipal Code of Chicago are hereby amended
by deleting the language stricken through and by inserting the underscored language, as follows:
2-32-525 Minimum credit quality.
Exclusive of investments made pursuant to Section 2-32-520(r), the total holdings across all
funds held by the Treasurer shall have no less than an overall average rating of Aa1 on a
quarterly basis, as rated by one two accredited rating agenciesy.
SECTION 4. Chapter 2-32-610 of the Municipal Code of Chicago are hereby amended
by deleting the language stricken through and by inserting the underscored language, as follows:
2-32-610 Treasurer’s reviews and reports
(a) The treasurer shall conduct a review on a monthly basis of the current total holdings
across all funds, including cash positions; portfolios, mark to market valuations; credit quality
for each security; and additional compliance issues.
(b) The treasurer shall, on or before the first day of February of each year within 30 days of
issuance of the City of Chicago Comprehensive Annual Financial Report (CAFR), submit a
report to the city council that details the performance of the total holdings across all funds held
by the treasurer's office, including asset allocation, cash position and overall credit quality as of
December 31 of the preceding year.
(c) The treasurer shall, on or before the first day of February of each year within 30 days of
issuance of the City of Chicago Comprehensive Annual Financial Report (CAFR), submit a
report to the city council on the written investment policy for compliance as of December 31 of
the preceding year, and present any recommendations for changes.

_______________________________
Kurt Summers
Treasurer – City of Chicago

_____________________________
John Arena
Alderman, 45th Ward

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