Sustainable investing perspectives on the US election

Markets see the 2024 US presidential election as pivotal to determining the path forward for sustainable investments. The US is the largest international funder of climate change mitigation and adaptation efforts. It is also home to a thriving market of renewable energy and electrification innovation, but the second largest emitter of carbon dioxide in the world as well.

Yet, contrary to emerging consensus, we believe that the party governing from the White House matters less to sustainable investing strategies and performance than overall macro conditions.

It is true that the two political parties sharply diverge in their positions on sustainability, reflecting two different potential paths for US policy. Recent history offers a useful guide: In 2016, President Trump withdrew from the Paris Agreement, and the Environmental Protection Agency rolled back over 100 policies within the first year of his administration. In 2022, under President Biden, Congress narrowly passed the Inflation Reduction Act (IRA), the largest climate-related investment legislation in US history allocating nearly USD 500bn in new spending and tax breaks for initiatives ranging from solar energy production to carbon capture by oil and gas companies, to electrification.

However, although regulatory and legislative actions matter, investor behavior and the performance of sustainable investments have surprised during both administrations.

In this special 2024 ElectionWatch edition of Sustainable Investing Perspectives, we dive into the history along with the policy expectations across energy, renewables, social issues, and SI investments, while discussing the implications for global investors. With eight weeks to go until the November 5 election, much could still change.

Investors should certainly be prepared for potential volatility in these thematic areas, but we recommend they continue to position for the longer-term opportunities tied to sustainability