In recent years, ESG-conscious investors have been busily allocating capital to ‘green’ investments, not least because they are able to generate returns to rival and even outperform other types of investment. However, the election of President Trump, with his notoriously sceptical view on climate change, could see these investments falling out of favour.
President elect Trump’s enthusiasm for the more polluting types of energy – he has pledged to approve the Keystone XL pipleline and revive the American coal industry – could discourage environmentally-friendly investing, to the detriment of the planet.
Trump has stated that the ‘concept of global warming was created by and for the Chinese in order to make US manufacturing non-competitive’. Contradictory to his assertions, it was reported this week that Arctic temperatures are nearly 20C higher than normal for this time of year (and the US is certainly still a manufacturing powerhouse). In addition to this worrying fact, Tump has threatened to ‘cancel’ the Paris climate change agreement.
All this rhetoric is disturbing given the monumental challenges we face in terms of climate change. Trump may dampen fund managers’ enthusiasm for more environmentally-friendly investments but responsible investors should see the benefits in the long-run.
The facts, meanwhile, are difficult to ignore. With 2016 predicted to be the hottest year on record, perhaps Mr Trump is simply hopeful of more opportunities to top up his tan.