Matt Christensen, Global Head of Responsible Investment at AXA Investment Managers ( AXA IM), comments on what the potential outcome of the US election could mean for responsible investment (RI) globally
“While RI is a long-term trend that is here to stay, the outcome of the US election can have a potential positive or negative short-term impact on the global evolution of the RI industry. We see that potential impact as threefold across regulation, clean energy and carbon.”
“From a regulatory perspective, if Clinton were to be elected as the next US President, we would expect her to advance what President Obama has started. Her plan would deliver on the pledge Obama made at the Paris Climate Conference in 2015. She has also promised to reduce greenhouse gas emissions by up to 30% in 2025 relative to 2005 levels and to put America on a path to cut emissions more than 80% by 2050.
“Clinton seems to believe that climate change is an ‘urgent threat’ and has put the topic front and centre on her campaign website. Therefore her election would potentially put the US in the driver’s seat for the acceleration of RI globally.
“If Trump were to be elected instead, we think that the evolution of the RI industry could hit a ‘speed bump’, as one of his promises has been to cancel the Paris Agreement as well as the US Climate Action Plan. Trump has strongly advocated the ‘saving of the coal industry’ and ‘stopping US support to UN global warming programs’.
“Nevertheless, we believe that while a Trump election wouldn’t necessarily do much to help advance RI globally, this trend is here to stay and in the long term wouldn’t be hindered by the possible policies resulting from a potential Trump presidency.”
“Clinton has proposed investing in clean energy including her Clean Power Plan. Her ambition seems to be to generate ‘enough renewable energy to power every home in America’. This would again be encouraging from a RI perspective as energy plays an important role in the climate change debate and the development of clean energy sources is a significant part of the global transition to a low carbon economy.
“Trump has said he wants to focus on an America First energy plan and invest in saving the US coal industry. That said, he has also promised to pursue ‘all forms of energy’ meaning that renewables would not necessarily be excluded from his plans. Nevertheless, there doesn’t seem to be a sense that clean energy sources would benefit meaningfully from his presidency.”
“Clinton’s approach to carbon would in our view be constructive. She has promised to take bold steps to ‘slash carbon pollution at home and around the world’ and has also said a Clean Energy Challenge would be launched to help partner with states, cities and communities to cut carbon pollution in the US. On her campaign website, Clinton says that ‘revitalising coal communities’ is a pillar of her energy and climate change agenda. This sounds to us like a supportive and engagement based approach that takes into account the workforce affected by cutting carbon in the US.
“When we look at the carbon issue from an ESG (environmental, social and governance) analysis perspective, impact on workforce and on local communities reliant on jobs from carbon intensive industries, is a highly significant perspective to take into account. Clinton seems to understand the importance of protecting the health and welfare of these communities by providing alternative economic opportunities for example in the case of the ‘coal communities’ that have kept factories running in the US for more than a century.
“Trump also seems very keen on protecting the jobs of the people working in carbon-intensive sectors, but from a long-term perspective, we haven’t seen evidence of him taking into account the need to mitigate the growing risks to these industries from environmental challenges, notably climate change.
“We see more and more clients recognising the potential long-term impacts of climate change and therefore being increasingly interested in and aware of the carbon footprint of their portfolios and of the companies they invest in. In our view, companies and governments should begin to recognise and act on this trend in a considerate manner that has engagement at its core.”