For pension fund managers, Department of Labor puts ESG back on the table – again. Cannot! Can so! Just as some states are trying to block ESG investing, the U.S. Department of Labor has given its blessing to the consideration of environmental, social and governance factors in selecting investments for pension fund beneficiaries. The Labor Department’s final rule, more than a year in the making, reverses Trump-era guidance limiting the ability of retirement plan managers subject to ERISA (short for the Employee Retirement Income Security Act of 1974) to consider ESG factors in selecting investments. The guidance has whipsawed with every change of administration since President Bill Clinton. The now-superseded 2020 rules, along with a period of uncertainty while the Biden administration formulated the new guidance, chilled allocations to ESG-labeled investment options. “Given the recent wave of misinformed political attacks seeking to undermine the validity of ESG investing strategies, this rulemaking comes at an important time and provides much needed clarity for investors and fiduciaries that ESG factors are indeed material,” says Fran Seegull of the U.S. Impact Investing Alliance.
Dealflow: Bridging the Gaps
C3 provides catalytic capital to accelerate the deployment of… catalytic capital. The Catalytic Capital Consortium, or C3, awarded nearly $1.4 million in grants to Village Capital, Pacific Community Ventures, Opportunity International, the Impact Investing Institute and five other organizations to expand the use of the patient, risk-tolerant, concessionary and flexible capital that is often needed for high-impact ventures and markets. “We are focusing on action-oriented projects that can translate into stronger deployment of capital while addressing deeply-embedded capital gaps and the needs of local communities,” said MacArthur Foundation’s Urmi Sengupta. Chicago-based Opportunity International will use the grant to de-risk micro and small loans for farmers and schools in low-income countries in Latin America, Africa and India. Village Capital will use the grant to create a digital matching platform for venture founders and investors for different types of financing. “These infrastructure projects are advancing solutions that support more efficient and effective delivery of catalytic capital,” said Chris Jurgens of Omidyar Network.
Impact Voices: Good Business
Five insights into the future of social entrepreneurship. As it marks 25 years of cultivating social entrepreneurship, the Miller Center for Social Entrepreneurship at Santa Clara University asked the field about transformation in the next quarter-century. A common aspiration: evolving beyond the need for the modifier “social.” “All entrepreneurship should ultimately create positive externalities—both financial and social,” says Geoff Davis of Sorenson Impact Center. Davis' views are among the responses that Miller Center’s Brigit Helms rounds up in a guest post for ImpactAlpha. Helms says she dreams of a day “when all entrepreneurs will understand that their job is to apply innovation and business principles to solve intractable social and environmental problems around the world.”
Agents of Impact: Follow the Talent
Sir Ronald Cohen will chair the new International Foundation for Valuing Impacts, established to advance “impact-weighted accounts.” Harvard Business School’s George Serafeim will chair the IFVI's valuation technical and practitioner committee (for background, see, “Big banks take on the challenge of accounting for their impact”)... JBG SMITH seeks a sustainability associate in the Washington, D.C. area.
On this week’s podcast, David Bank joins host Brian Walsh to chart the year ahead in impact investing. We also get a sneak peak of Bank’s conversation with Jigar Shah from Generate Capital. Plus, the headlines.