ElectionWatch 2024: Sustainable investing perspectives on the US election

Investments in renewable energy capacity have also been steadily increasing during the Biden administration, as they did when Trump was in office. In 2023, these reached USD 93bn, up from 47bn in 2016 (BNEF, 2024). This has financed a spike in new capacity, with wind generation up 87% in this period, and utility-scale solar up 356% (EIA, 2024). The annual growth rates were similar for both administrations, with a slight uptick during Trump’s four years in office versus Biden’s first three.

In discussing investor and corporate activity on sustainability topics, we would be remiss if we did not mention the adoption of diversity goals among listed US companies over time. US corporate diversity has also improved consistently during both the Trump and Biden administrations. The share of female directors across S&P 500 companies reached 32% in 2023 (up from 23% in 2018, in the middle of Trump’s term), and racial and ethnic makeup reached 25% (versus 20% in 2018), according to a recent report by The Conference Board.

On the development cooperation side, USAID’s budgetary resources (as stated in their annual financial reports) rose from USD 27bn in 2016 to nearly USD 52bn in 2023, reflecting the growth in funding needs and opportunities across emerging and frontier markets.

These examples illustrate a fundamental trend that has an economic and geopolitical foundation and is likely to be independent of election outcomes, as long as investors continue to see the potential for long-term financial returns and opportunities across sustainability and sustainable investments (regardless of whether they are explicitly referred to as “ESG” or not).

In addition to secular trends, it might be worth considering how the more polarized parts of the public respond. Under our “Red wave” scenario, we think it is possible that more private endowment and private foundation assets with a focus on environmental or social issues flow into SI strategies, at least near term, even in the case of reduced activity from state pension funds.

One way to illustrate this is to parallel investors’ potential reaction to some of the evolution in the philanthropy space, where private individuals and families have been largely driving capital flows. According to Giving USA, charitable giving has increased by nearly 30% since 2019, with corporate giving showing the highest growth rates, and individual donors contributing the largest total share. Anecdotally, according to various media reports, donations to Planned Parenthood and similar charitable organizations significantly increased in the early days of the Trump administration, and more recently after the overturn of Roe v. Wade.

Assumptions on both secular and emotional responses carry a degree of risk. Shorter-term market conditions—such as interest rates and inflation—will continue to impact sustainable investments just as they do conventional capital allocations regardless of fundamental trends. In addition, very drastic policy changes—such as complete repeal of IRA or removal of tax benefits for charitable contributions—might pose challenges to continued growth in sustainable investment and philanthropy flows.