The bill creates a new legislative intent section and amends RCW 43.33A.110, 43.33A.140, and 43.33A.150 to require the Washington State Investment Board (WSIB) to incorporate a comprehensive framework of "responsible investment principles" into its investment policies and procedures while continuing to seek strong returns at a prudent level of risk. It authorizes WSIB rulemaking, requires rules to ensure members comply with chapter 42.52 RCW, directs the board to assess prudent risk by accounting for responsible investment principles and inherent company or instrument risk, and directs investment or exclusion decisions to be based on current circumstances and an assessment of probability and severity of future violations and alternative risk‑mitigation measures. The bill directs WSIB to develop and publish proxy voting guidelines that treat responsible investment principles as business and systemic risks and to use ownership authority, including supporting shareholder resolutions, to reduce such risks. It imposes reporting requirements: quarterly written summaries of investment activities to specified recipients, provision of information to the Department of Retirement Systems for monthly reports, and annual reports on L&I accident, medical aid, and reserve funds and on higher education permanent funds to specified legislative committees, plus an annual report on how responsible investment principles were incorporated and actions taken. The statute defines responsible investment principles by example (non‑exhaustive), including investments that contribute to serious human rights violations, involvement with weapons or conduct contrary to international humanitarian law, provision of services for prisons or immigration detention, gross environmental degradation, greenhouse gas emissions inconsistent with state climate goals, production of recreational tobacco, significant coal production or coal‑based power revenue (10 percent revenue threshold or new coal development), gross corruption or serious financial crimes, restraint of trade or collusive behavior, and other serious ethical violations. It also sets a diversification limit: no corporate fixed‑income issue or common stock holding may exceed 3 percent of cost or 6 percent of market value of a particular fund. This is primarily a procedural and policy change to existing law governing state investment practices rather than a criminal or penalty change. The extracted facts do not show the prior or full amended text for comparison, the list of responsible investment principles is explicitly non‑exhaustive, and terms such as "state climate goals," "appropriate successor committees," and the content of the referenced chapters (42.52 RCW and 34.05 RCW) are not defined in the provided material.

If enacted, the Washington State Investment Board will be required to build investment decisions around a set of responsible investment priorities and to use its ownership rights (including proxy votes) to reduce exposure to companies involved in the listed harms (for example certain human rights abuses, war‑related weapons, prisons or immigration detention services, severe environmental harm, high coal revenue, tobacco, corruption, and anticompetitive behavior). That will likely lead WSIB to add new policies, more frequent reporting to the Legislature and other agencies, and ongoing monitoring and voting activity; it also imposes a formal 3% cost / 6% market cap on any single corporate holding, so portfolios may be rebalanced to meet concentration limits and funds such as L&I’s accident, medical aid, and reserve funds and higher education permanent funds may see shifts in holdings and increased transaction or compliance costs. The groups most affected are the WSIB (which will carry the new responsibilities, rulemaking, reporting and likely operational costs), agencies that receive more detailed investment reports (Department of Retirement Systems, L&I, higher education funds, and legislative committees), and companies in the implicated sectors that may face reduced WSIB investment or shareholder pressure. The law requires WSIB to still seek strong, prudent returns and to consider premium‑stability for L&I funds, so any portfolio changes will be balanced against financial objectives, but how broadly the non‑exhaustive “responsible investment principles” will be applied and how terms like "state climate goals" are interpreted are not defined here and leave the scope and fiscal impact somewhat uncertain.