As we await confirmation of key Presidential, Senate and House races, it appears likely that we are on track for two more years of divided government in Washington. This will pose significant challenges to policymakers and advocates alike. The same is true for the champions of impact investing, but we have seen over the last four years and throughout previous administrations that our work continues to have appeal across ideological and partisan divides.
At the U.S. Impact Investing Alliance, we remain hard at work today crafting a proactive impact investing policy agenda that can contribute to a just and equitable recovery from ongoing crises. We set out to do this work long before the election because we knew that it held immense potential no matter the results. We knew that because of the tremendous progress impact investing advocates have already made with Democrats and Republicans throughout all levels of government. Whoever sits in the White House next January will have immediate opportunities to sustain the growth of impact investing and catalyze even more private capital for public good. Some of the issues that will demand immediate attention include:
Small Business Relief – There may be a narrow window of opportunity to pass meaningful COVID and economic relief legislation during the lame duck session of Congress. It is far from certain that the Senate will now act, but if they do then the President-Elect should work closely with leaders on Capitol Hill to ensure a package is tailored to provide robust support for hardest hit businesses. In particular, they should look to build on the success of CDFIs and MDIs in channeling economic relief to main street businesses, in particular those owned by Black and Brown entrepreneurs and those based in rural and tribal communities.
Community Reinvestment Act - The landmark civil rights policy which seeks to counteract decades of intentional, systemic racism in the financial sector is in need of modernization. Unfortunately, the Office of Comptroller of Currency missed the mark with an effort earlier this year to do so, as indicated by widespread industry opposition and the decision of regulators at the FDIC and Federal Reserve not to endorse that effort. However, the Federal Reserve has put forward its own vision for reform, unanimously supported by Republican- and Democratic-appointed Fed Governors. The President-Elect should look to build consensus around the Fed’s approach and work with communities, industry leaders and investors to strengthen and reaffirm the CRA.
Improved Corporate Disclosure - For years, a growing chorus of financial sector leaders, impact investors and community advocates have been calling for more clear and consistent corporate disclosure on environmental, social and governance (ESG) factors. From the SEC's Investor Advisory Council to bipartisan leaders in Congress, there is a growing consensus that these factors often have a material effect on financial performance. Clarity on disclosure standards from the federal government will also help businesses avoid unnecessary costs and confusion, allowing for more consistency with ongoing regulatory developments in the EU and globally. Comprehensive legislation mandating corporate disclosure of ESG factors should be a priority. Otherwise, the SEC already has the authority and mandate to take meaningful regulatory action.
Of course, there is far more work to be done. But impact investing advocates should take heart in the fact that these and other critical issues can and should still be advanced regardless of the final election outcomes. The current crisis set demands bold and innovative leadership by government. We at the Alliance stand ready to work, as we always do, with leaders on both sides of the aisle who understand the catalytic power of impact investing and its role in shaping a more equitable and resilient economy for the future.