The threat of Trump is back in the air! On November 6, 2024, the Republican candidate’s victory cast a shadow among those committed to sustainable development. On paper, the candidate’s announcements do not bode well for ESG issues. Could the anti-ESG movement, already vibrant in the US during his first term, gain further strength? Let’s delve deeper into the possible social and environmental risks of the new mandate.
THREAT OVERVIEW
“Drill, baby, drill”, the Republican candidate’s campaign mantra, is quite explicit regarding his ambitions in the fight against climate change. There are many promises: reopening the oil taps, in the hope of obtaining cheaper energy, and calling into question the environmental regulations implemented during the Biden era in order to free businesses. On an international scale, Donald Trump also threatens to withdraw from the Paris Agreement again and even go further, abandoning the United Nations Framework Convention on Climate Change (UNFCCC) with the risk of destroying the collective goal of 1.5°C . According to Carbon Brief, the planned policies could lead to an increase in emissions of 4 billion tonnes of CO2 by 2030, higher than the annual emissions of the European Union.
A THREAT THAT MAY NOT BE SO EASY TO IMPLEMENT
Will Trump’s ease be enough for him to carry out his plan? His plan to dismantle the IRA, for example, will encounter considerable resistance within his own camp. In fact, 80% of the investments sponsored by the IRA benefited some Republican states, such as Texas which received important subsidies that allowed it to be at the forefront of renewable energy and the creation of many jobs in the sector. . Various environmental provisions threatened within this law also strengthen the competitiveness of American industry, especially vis-à-vis China, in support of the “America First” slogan so dear to Republicans. Finally, on the social front, the future president’s declarations on the expulsion of 10-12 million undocumented workers to their countries of origin will undoubtedly have a negative impact on inflation and economic growth.
GLASS HALF FULL OR HALF EMPTY?
Does this contrasting picture lead us to see the glass as half empty or half full? At this stage, the unfavorable record of announcements does not arouse enthusiasm and has even created excessive volatility in assets considered “green”. As demonstrated by the measures actually taken during the previous mandate, the implementation of the future President’s provocative slogans is often accompanied by nuances. However, it is reasonable to fear a contagion effect on other countries, which are less reluctant to review their commitments downwards in the face of prevailing climate scepticism.
At a time when many investors fear the retreat of European economies in the face of the United States and China, is this not perhaps an opportunity for Europe to assert its leadership in these areas fundamental to the future of our planet… and our economies? As responsible and committed investors, we continue to encourage companies and regulators to stay on course towards ambitious measures, through the lens of dual materiality.
