NEW YORK, Dec. 15, 2020 /PRNewswire/ -- The U.S. Impact Investing Alliance ("Alliance"), a non-profit organization dedicated to building the impact investing ecosystem, today announced the publication of a new report: "Private Capital, Public Good: Leveraging Impact Investing to Support a Just and Equitable Recovery." The full report is available at www.impinvalliance.org/privatecapital-publicgood.
This comprehensive report, released in advance of a change in Congress and in the White House, includes 12 specific policy recommendations and ideas with the potential to catalyze more impact investments towards pressing challenges. The report highlights the need for Congress and the White House to be champions for this change and urges government leaders to rise to the moment and take swift action over the next two years.
The report is focused on how policy can influence investment decisions either by promoting impact transparency or by incentivizing more private capital into investments with positive impact.
Fran Seegull, Executive Director of the U.S. Impact Investing Alliance: "Investors of all sizes are asking important questions about the social, economic and environmental impact of their investment decisions. The federal government has a unique role to play, ensuring that investors have access to that information and that they have a clear mandate to act on it, thereby ultimately incentivizing more investors to make the kinds of investments that we need to ensure a just and equitable recovery."
The original 'Private Capital, Public Good' report was published in 2014 by the U.S. National Advisory Board on Impact Investing, the precursor organization to the Alliance. Since 2014, approximately 80 percent of those original policy recommendations have been implemented or advanced in some form, including the passage of a tax incentive for community investment, the creation of the U.S. International Development Finance Corporation and clarification of regulatory rules allowing foundations to make impact investments.
The new 'Private Capital, Public Good' report builds on those original recommendations, and includes 12 new recommendations that were created with input from dozens of impact investors, community stakeholders and public policy experts. These recommendations, which will be updated and added to over time, can be grouped under two main categories or themes.
Transforming Community Investing to Confront Inequality
In the report, the Alliance wrote about the "need to counteract decades of deliberate underinvestment in Black, tribal, rural and other marginalized communities." The Alliance and its partners believe "we have the policy tools to invest in thriving, inclusive and sustainable communities, but we must act urgently to fortify and scale these tools to address ongoing challenges." Specific recommendations include:
- Community development financial institutions (CDFIs) and minority depository institutions (MDIs) should be fortified and scaled while also seeking to develop new models to close gaps that have left Black, Brown, rural and tribal communities underserved.
- Regulators should reassert the purpose of the Community Reinvestment Act (CRA) – to counter decades of explicitly racist banking practices – and modernize it to address the financial system as it exists today.
- Congress should renew and reform community investing tax policies, ensuring that they are transparent and accountable, and that incentives are aligned with community outcomes.
Accelerating Stakeholder Capitalism to Advance American Economic Leadership
In the report, the Alliance asserts that "global capital markets are now demanding sustainability, transparency and accountability from corporate actions and financial institutions." In order to meet this demand and maintain America's position of economic leadership, the Alliance argues that "we must accelerate the transition to stakeholder capitalism and commit to a new vision of markets that values the impact of investment and business decisions on all stakeholders." Specific recommendations include:
- Regulators should ensure that corporations have clear, consistent disclosure requirements on environmental, social and governance (ESG) issues to enable investors and other stakeholders to account for and manage impact.
- Regulators should provide clarity to investors – including retirement plans and charitable endowments – around their duties as fiduciaries and their ability to consider the long-term materiality of impact factors.
- Congress and the Administration should leverage the tools and lessons of development finance to reinvest in American infrastructure and industry to foster an economy that provides security and quality jobs for all.
Darren Walker, President of Ford Foundation and Chair of the U.S. Impact Investing Alliance: "The scope and scale of the challenges we face today demand proactive and pragmatic leadership – without delay. As this report outlines, impact investing is a critical tool we can use to respond to these crises and build an economically just America based in a new, inclusive form of capitalism. With effective federal leadership and strong partnership with government, we can leverage private capital at an historic scale to reshape and strengthen our national and local economies."
Tracy Palandjian, CEO & Co-Founder of Social Finance and Vice Chair of the U.S. Impact Investing Alliance: "Impact investing has grown tremendously in recent years, thanks in no small part to smart, bipartisan leadership in Washington. This report presents a vision of how we can rise to the challenge of our current moment of crisis and emerge with a new set of economic systems that invigorate deliberately underinvested communities while placing value on the social and environmental impacts of investment and corporate activity."
The policy recommendations will be shared with the incoming Biden Administration, federal regulators and members of Congress to help build and shape an agenda for the next two years of policymaking.
About the U.S. Impact Investing Alliance
The U.S. Impact Investing Alliance ("Alliance") is a non-profit organization dedicated to building the impact investing ecosystem by bridging market gaps and addressing shared challenges. The Alliance's long-term vision is to place measurable social, economic and environmental impact alongside financial return and risk at the center of every investment decision. For more information, please visit www.impinvalliance.org.
SOURCE U.S. Impact Investing Alliance