The U.S. Presidential Election, Environmental, Social, Regulation, Investing, Events & Membership

The U.S. Presidential Election

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Incoming President Donald Trump’s approach to ESG issues contrasts sharply with that of the Biden Administration. Trump has regularly downplayed the urgency of climate change and stated his intent to have the United States exit the Paris Agreement. Experts predict that in his second term, Trump will look to reverse the SEC’s Climate Disclosure Rule and a Department of Labor rule that was more friendly to the use of ESG in retirement plans. Trump has also signaled an interest in clawing back as many IRA credits as possible, though some experts say doing so would require Congressional approval, which may be difficult as numerous Congressional Republicans oppose the repeal of the IRA given its benefits to their districts. Experts say a more likely scenario would be for a Republican-controlled Congress to attempt to sunset tax credits for projects starting after 2026, potentially reducing wind, solar, and energy storage development by 17%.

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According to Politico, President Trump’s victory will have major implications on U.S climate policies. Trump has repeatedly vowed to exit the Paris Agreement, increase oil production, and “frack, frack and drill….”? Observers expect, based on his prior term, that Trump will appoint climate-deniers to the EPA, Department of Energy, and NOAA; propose deep budget cuts to climate science initiatives; and abandon or rescind numerous EPA environmental rules (including those relating to power plant carbon and oil/gas methane emissions). Trump has stated that he is against the Biden administration’s support for electric vehicles.? Analysts are split on what Trump’s victory will mean for the IRA – with some noting growing support for the law by congressional Republicans who see it providing federal dollars to their states. Some experts predict that the transition from fossil to renewable energy will continue under the second Trump administration, albeit at a much slower pace, because solar energy installations are less expensive to build than other technologies. However, others note that significant government support, which has driven down the cost of solar and other renewable projects, is likely to drop under President Trump.????

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Project 2025, a proposed roadmap for use by a potential Trump administration, outlines several strategies to curtail ESG and DEI initiatives. ?Although Trump has distanced himself from Project 2025, it was spearhead by officials and advisors from his first administration. The report recommends, among other things, limiting certain companies from managing government retirement funds, curtailing shareholder proxy voting, and preventing mandatory government reporting of corporate GHG emissions. Other recommendations include legislation preventing the SEC from requiring corporates to disclosure social or human capital information, having the Federal Trade Commission establish an ESG/DEI Collusion Task Force, eliminating all DEI initiatives from the Treasury Department, and reversing President Biden’s executive order requiring federal agencies to focus on climate-related risks.??

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Environmental

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Canada’s Prime Minister Justin Trudeau’s government will mandate a 35% reduction in emissions for oil and gas companies in Canada. Environment Minister Steven Guilbeault announced that this reduction (from 2019 levels) will be achieved through a cap-and-trade system, with enforcement beginning in 2030 and the cap gradually tightening until Canada reaches net-zero by 2050. Guilbeault stated that the government expects the oil and gas sector to invest record profits into pollution-cutting projects and sustainable job creation. Draft regulations were released on Monday with final regulations anticipated in 2025. To help meet the reduction target, oil and gas companies can use carbon offsets or contribute to a decarbonization fund to cover up to 20% of emissions at each facility. Large operators must start registering and reporting emissions in 2026, with small operators following in 2029. Trudeau’s government maintains that oil and gas production can still expand under the regulations, with projected growth of 16% between 2019 and 2032.?

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According to the European Commission’s 2024 Climate Action Progress Report, the EU achieved an 8.3% reduction in net GHG emissions in 2023 – the largest decline since the COVID-19-driven drop of 9.8% in 2020 and marking significant progress from a 3% reduction in 2022. The report highlights a 24% decrease in annual emissions from electricity production and heating, driven by a substantial increase in renewable energy production (primarily wind and solar) and a shift from coal to gas. Renewable energy now generates nearly 45% of electricity in the EU, while fossil fuel use in electricity generation fell by 20% in 2023. According to the report, net GHG emissions are currently 37% lower than 1990 levels – putting the EU on track to meet the European climate law’s goal of achieving a 55% emissions reduction by 2030 (with net zero emissions required by 2050). The EU is now considering a 90% reduction by 2040, which according to the Commission’s estimates would require annual investments of approximately €660 billion in the energy sector and €870 billion in the transport sector – focused on industrial decarbonization, electrification, energy efficiency, and sustainable fuel production.

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Social

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Treasury Secretary Janet Yellen has announced a new financial inclusion strategy aimed at providing public, private, and nonprofit organizations a roadmap to help communities participate in the financial system, build wealth, and strengthen consumers’ financial resilience and well-being. The strategy, developed following a 2023 Congressional request, incorporates input from experts, community leaders, industry representatives, and the public and other federal agencies. It focuses on five core recommendations: 1) expanding access to transaction accounts tailored to meet consumer needs; 2) promoting the availability of secure and affordable credit options; 3) increasing the inclusiveness of government-supported financial products and services; 4) broadening equitable access to savings and investment opportunities; and 5) building trust in the U.S. economy by safeguarding consumers against fraud.

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Regulation

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Schroeders has released a detailed report summarizing recent global developments in sustainability policy.?The report details significant updates in the EU, US, Asia-Pacific, and beyond. Key changes include the UK’s expansion of voluntary investment labels, EU ESG fund name guidelines, US Supreme Court rulings restricting the ability of federal agencies to regulate, Hong Kong’s proposed sustainable finance taxonomy, Japan’s guidelines on impact investing, Korea’s draft sustainability disclosure standards, Australia’s sustainable finance roadmap, and more.

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California Governor Gavin Newsom has announced a partnership with Airlines 4 America (A4A) to increase the state’s consumption of sustainable aviation fuel (SAF). This collaboration with the California Air Resources Board (CARB) sets a target of 200 million gallons of SAF by 2035, meeting around 40% of California’s intrastate travel demand (10 times current SAF usage levels). The partnership also aims to drive supportive policies and incentives to promote investment and accelerate SAF production and deployment. Progress will be assessed annually, with a working group of government and industry leaders addressing challenges and tracking advancements.

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Malaysia’s Ministry of Natural Resources and Environmental Sustainability (NRES) has issued a consultation on the proposed Climate Change Act, reinforcing Malaysia’s commitment to the Paris Agreement and reducing GHG emissions. Currently, Malaysia has no specific climate change legislation, but NRES is leading efforts to expand climate-related legislations and strengthen climate governance at international and domestic levels. The proposed Climate Change Bill includes provisions for GHG reduction targets, the establishment of a new regulatory body, a National Integrated Climate Data Repository (NICDR), carbon trading regulations, financial provisions, reporting requirements, and enforcement mechanisms.

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Investing

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As part of the Bipartisan Infrastructure Law, the US Department of Energy (DOE) has announced $44.8M in funding for eight projects aimed at lowering the cost of EV battery recycling. Overseen by the DOE’s Vehicle Technologies Office, these projects fall into three main categories: (1) improving EV battery recycling processes, (2) advancing battery diagnostics, and (3) establishing localized recycling solutions. The projects span several states and institutions -- including California’s B2U Storage Solutions, Illinois’ Caterpillar Inc., Michigan’s General Motors, New Jersey’s Siemens Corporation, Tennessee Technological University, University of Akron (in Ohio), and more.?Sample projects include automating EV disassembly practices, designing low-cost reusable transport systems for used batteries, and developing mobile preprocessing hubs.

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Germany has engaged Deutsche Bank and DZ Bank as joint ESG coordinators for the upcoming update of its Green Bond Framework to be released in 2025. Initially launched in 2020, Germany’s framework outlines objectives for sustainable finance, allocation of proceeds, and compliance for green bond issuances. The framework includes a “twin bond” concept, pairing green and conventional bonds with similar characteristics, in order to highlight the worth of the sustainability characteristics/greenium.” Germany, a leading sovereign green bond issuer, has raised over €73 billion since its first issuance in August 2020.?

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Events & Membership

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You are invited to join Finpublica, Impact Capital Forum, and Impact Hub – NYC on November 21st (6pm ET) for:? What's on the Horizon for Sustainability and Impact in 2025? ?Hear from luminaries across the sustainable finance and impact investing spaces as they share predictions on what to expect over the course of the next year as the world prepares for a second Trump administration. Speakers include:? (1) Erika Karp,?Executive Director – Aspen Institute’s Finance Leaders Fellowship & Principal – Cornerstone; (2) Jeffrey Gitterman,?CEO – Gitterman Asset Management; (3) Linda Eling Lee,?Founding Director – MSCI Sustainability Institute; and (4) Shiva Rajgopal,?Professor – Columbia Business School. You can register for this New York City in-person program here.

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Finpublica’s membership portal is live. If you are interested in joining a community of 450 finance leaders focused on sustainable finance and ways to implement initiatives inside their organizations and across the industry, we invite you to apply.

Adam Wasserman

Email: [email protected]