Within the finance sector, ESG might seem like a trend that’s only really caught on in the past few years—but a lesser-known banking law passed in 1977 laid the groundwork for modern ESG policies and the $450 billion community development financing industry, and it’s being updated to serve low-and-moderate-income communities amidst changes in the banking and housing sectors.
The Community Reinvestment Act was passed in response to redlining practices perpetuated by banks, which were systematically lending money to certain (often white, wealthy) neighborhoods and leaving poorer areas without access to capital. The law requires banks to invest a certain amount of their capital in low-to-moderate income areas, facilitating home loans and supporting local business.
