Responsible investing under a Biden presidency

Article | 24 February 2021 | ESG

2 years ago

On 20 January, Joe Biden became the 46th president of the United States. Here we look at Biden’s plans in areas such as climate change and green infrastructure, and consider what these could mean for responsible investing.

Climate change is high on the agenda

Climate change is a fundamental issue within responsible investing, and it is high on the new president’s agenda. On his first day in office he rejoined the Paris agreement, an international treaty aimed at limiting global warming. Since then he has established an office of Domestic Climate Policy in the White House and declared climate change an issue of national security.

Biden has also set a target for the US to become carbon-neutral by 2050. To achieve this, we expect increased requirements for companies to report on their environmental impact – and pressure on them to reduce it.

A focus on clean energy

One of Biden’s key weapons in the fight against climate change is a push for clean energy. Whereas his predecessor relaxed regulations for traditional energy companies, Biden has already demonstrated his stance on fossil fuel production. He has scrapped the Keystone XL oil pipeline permit and paused the extraction of oil and gas from federal lands.

He also made a promise to create a carbon-free energy sector by 2035, while pledging $400 billion of investment in clean energy over a decade. Of course, this could have huge consequences for fossil fuel producers and companies all along the renewable energy supply chain.

Green infrastructure and jobs

The plans spread further than the energy industry. While campaigning, Biden promised to ‘build back better’ by spending $2 trillion on green infrastructure. Projects will range from installing electric vehicle charging points to building energy-efficient, affordable housing.

To turn these plans into reality, the new president will create 10 million new jobs. He has promised that they will pay good wages, and will benefit people from all backgrounds and communities, both young and old

The plans must go through Congress

While Joe Biden clearly has big plans, it’s important to remember that these must be approved by Congress. The Democrats control both the House and the Senate, but there are different attitudes towards issues such as clean energy even within the party. This means that any proposals could be delayed or amended before they become a reality.

New opportunities for responsible investors

With this rapidly changing landscape in the US, and a wider transition towards sustainability across the whole world, we expect new ESG-related risks and opportunities to emerge. The integration of ESG analysis in an investment process could become more important than ever before.

At Architas we work with fund managers to ensure they are investing responsibly and focusing on environmental, social and governance (ESG) issues. In 2018, we began our journey to full ESG integration across all of our offers, and we aim to achieve this by the end of 2021. Since 2018 we have also been signatories of the United Nations Principles for Responsible Investment.

Insight

Re-globalisation: what’s the big story?

Article | Investments | 03/10/2023

The last few years, marked by the global pandemic and geopolitical tensions, have brought a period of de-globalisation of world trade. However, despite disruption to the established trading order, with its extended supply chains, new patterns of trade continue to emerge.

Insight

Monthly Review - September 2023

Article | Investments | 03/10/2023

Markets contemplated a milestone moment, as western central banks appeared to hit the ‘high for long’ pause in their hiking cycle. The US Federal Reserve (Fed) and the Bank of England left rates on hold, a week after the European Central Bank (ECB) raised rates, possibly for the last time this cycle.

Insight

Luxury goods outlook

Article | Market updates | 27/09/2023

Luxury brands are characterised by very high levels of quality, price and crucially, exclusivity. Ferrari founder Enzo Ferrari stated that “Ferrari will always deliver one less car than the market demand”.

We use cookies to give you the best possible experience of our website. If you continue, we'll assume you are happy for your web browser to receive all cookies from our website. See our cookie policy for more information on cookies and how to manage them.