The bill was passed in the House in April in a 103-5 vote.
A spokesman for the governor said in an email that McMaster will sign the bill into law, though a date for that hasn't been set.
The commission, which manages the $39.9 billion South Carolina Retirement Systems' investment portfolio, did not immediately respond to a request for comment.
When the House was considering the bill last year, Michael Hitchcock, the commission's CEO, testified before a subcommittee in March and said the commission doesn't pursue or promote environmental, social and governance factors while making investment decisions.
"Our job is to invest and manage those assets in a way that provides superior risk-adjusted returns," he said. "That's it. Full stop. Period. That is the only thing that we're interested in."
At the hearing, Hitchcock endorsed the bill and said there's value in enshrining the commission's current practice into the state's code.
The bill defines a pecuniary factor as one that "a prudent person in a like capacity would reasonably believe has a material effect or impact on the financial risk or return on an investment, including factors material to assessing an investment manager's operational capability, based on an appropriate investment horizon consistent with a retirement system's investment objectives and funding policy," according to the bill text. The bill goes on to say that the term excludes nonpecuniary factors, which is "any factor or consideration that is collateral to or not reasonably likely to effect or impact the financial risk and return of the investment and include, but are not limited to, the promotion, furtherance, or achievement of environmental, social, or political goals, objectives, or outcomes."
On proxy voting, the bill requires, "to the extent that it is economically practicable," the commission to "retain the authority to exercise shareholder proxy rights for shares that are owned directly or indirectly on behalf of a system."
Also, any commission engagement with a company "regarding the exercise of shareholder proxy votes or the proposal of a proxy question must be based solely on pecuniary factors and for the sole purpose of maximizing shareholder value, except that the commission may engage with a company to express opposition to the proposal of or the merits of a proxy question that does not have a pecuniary impact."