Biden & a Sustainable Investment Boom

Now that the Electoral College has confirmed Joe Biden as the 46th President of the United States, businesses can get on with looking to the future under a new administration, one that promises less scorched earth in its policies let’s say.

In the months preceding the 2016 election, sustainable investing’ was a gathering trend. Larry Fink, Blackrock’s CEO sent an open letter to global CEOs, saying, “Generating sustainable returns over time requires a sharper focus not only on governance, but also on environmental and social factors facing companies.” Any ambitions on this score were, however, shattered by the surprise election of Trump, whose administration was a threat to goals when investing around climate change and social justice,” says Justina Lai, chief impact officer at San Francisco-based Wetherby Asset Management.

The last four years has been a case of missed opportunities thanks to an obstructionist government.  However, as it finally drew to an end, the pandemic and the murder of George Floyd, amongst other issues, revived commitment to socially conscious investing.

Peter Krull, founder, CEO and director of investments at Asheville, North Carolina-based Earth Equity Advisors, said: “The reality is we’ve had more growth over the last four years than we did over the previous 12 years. After the 2016 election, people said that if the government isn’t going to work on these issues, we’re going to have to do it for ourselves.” He added an upbeat thought, “If the last four years of growth were with headwinds, I’m really excited about seeing a tailwind.”

How much ESG investment is there?

The United States Forum for Sustainable and Responsible Investment (US SIF) reports that total Environmental, Social & Governance (ESG) investing strategies rose by 42% over the past two years, growing from $17 trillion to $20 trillion. This figure represents 33% of all professionally managed US assets.

It is the view of Forbes writer Jason Bisnoff, and most likely many others, that President-Elect Biden will not have to do too much to encourage more growth in ESG investing. Furthermore, his picks for cabinet positions include several ESG investment supporters, such as john Kerry, who is his choice as special presidential envoy for climate. Allison Herren Lee, the current SEC commissioner may take the position of SEC chair, and she has made ESG and climate change central to her agenda in her time in public service.

Fiona Reynolds, CEO of the United Nations Principles for Responsible Investment, commented, “Over the last couple of years, the Trump administration brought a number of policies that made responsible investment more difficult and we hope that we can reverse some of those policies and move ahead.” Now, she says, “I’ve never felt more certain about the future for sustainability than I do at the moment.”

This enthusiasm from all quarters, plus Biden’s promise to bring the USA back into the fold of the Paris Agreement on Climate, bodes well for the future of this approach to investing.

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