NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, August 9, 2017

Since the November election and January inauguration of Donald Trump, I’ve gotten a lot of questions about whether the new president will have a chilling effect on sustainable investing. The term refers to any investment approach that systematically includes environmental, social and corporate governance (ESG) criteria in the investment process and/or the consideration of ESG impacts on investors, stakeholders, the environment, society, economy and financial system.

To my knowledge, Trump has never mentioned sustainable investing, but if he has, I’d wager that the terms “hoax” or “fad” were involved. With the new administration trying to bring back coal, pulling the US out of the Paris Agreement, and favouring broad deregulation of business, has sustainable investing now become a risky proposition? Will companies that have been improving their sustainability profiles start abandoning their progress? Will the stocks of “bad” companies suddenly start outperforming, causing sustainable strategies to underperform?