It may seem like minutia to some, but new guidance issued by the U.S. Labor Department may open up additional impact or sustainability funds that can help tackle the challenge of development finance.
The change to the Employee Retirement Income Security Act of 1974 — a federal law that sets standards for pension and health plans — essentially removes a 2008 provision which was confusing, and had a chilling effect on impact and sustainable investing.
The new guidance aims to enable private pension fund managers to consider economic, environmental, social and governance concerns in addition to a financial return when making investments — a change that could unlock a significant source of capital for socially responsible businesses and funds.
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About the author
Adva Saldinger@AdvaSal
Adva Saldinger is a Senior Reporter at Devex where she covers development finance, as well as U.S. foreign aid policy. Adva explores the role the private sector and private capital play in development and authors the weekly Devex Invested newsletter bringing the latest news on the role of business and finance in addressing global challenges. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.
