The recent presidential victory of Joe Biden will give rise to an unprecedented boom of Environmental, Social and Governance (ESG) investments.
Nigel Green, CEO of the deVere Group, claims that the new presidency will see huge changes in ESG investments as the US shifts to become more socially and environmentally responsible. ESG investment and corporate social responsibility have gained traction in recent years. At the beginning of 2020, companies were already discussing their environmental goals for the decade. A deVere survey carried out in the summer showed that over a quarter of their clients are already actively engaging in responsible, impactful and sustainable investment. This trend is set to soar with Biden as president.
Trump was not an advocate for ESG commitment, openly expressing his lack of regard for climate change issues. Under his presidency, the U.S. withdrew from the Paris agreement and he fiercely opposed a European policy on ESG investment and corporate disclosure. The Trump admin actively discouraged environmental regulations. Despite the US being the second-largest global CO2 emission producer, Trump did not try and reduce this impact through his policy-making.
Biden as President
Joe Biden and Kamala Harris are a power-house when it comes to ESG goals. During their campaign, they were keen to highlight issues of climate change, social justice, equality and diversity. Additionally, they aimed to make companies more transparent and accountable when it comes to commitment to the environment. Already, Biden has promised to bring the US back into the Paris Agreement, the multinational commitment to combat climate change. Biden’s presidency looks to see a country-wide shift from fossil fuels to renewable energy. A Biden White House is going to bolster sustainable, impactful investing, a sector already outperforming the market this year.
Biggest Ever Generational Transfer of Worth
ESG investment is set to get a major boost due to demographic shifts. Green says that “the biggest-ever generational transfer of wealth – likely to be around $60trn – from baby boomers to millennials… is to take place in the next couple of years”. Millennials have proven themselves to be the most socially and economically conscious generation; this, in turn will aid the boom of ESG investments.