08/08/24

US: Trump election win to spell chaos for ESG strategies

As published on: proactiveinvestors.co.uk, Thursday 8 August, 2024. 

Investors will have to prepare for a complete overhaul of economic, social and governance (ESG) rules by the US government in the case of Donald Trump winning the election.

That’s according to Panmure Liberum analysts, which highlighted a second term for Trump would see green loans and investments planned under Biden’s administration up in the air.

“While the impact will be limited to US federal government investments and regulations, UK and European companies with operations in the US will be significantly affected,” analysts wrote in a note.

Trump remains most likely to win the presidential election, analysts said, with Republican candidates also expected to sweep Congress.

Such a scenario would no doubt lead to a scaling back of green policies and increased fossil fuel, grid, nuclear power and nuclear arms investment, according to the bank.

Plans for energy sector deregulation also appear in Republican proposals, analysts highlighted.

Oil and gas companies would emerge from the election as “relative winners” therefore, alongside firms involved in nuclear reactor and weapon development.

In terms of UK-listed companies, this includes defence firms BAE Systems PLC, Melrose Industries PLC and Babcock International Group PLC, Liberum said.

Oil heavyweights Shell PLC and BP PLC would also likely benefit, alongside energy sector peers John Wood Group PLC, Hunting PLC, Centrica PLC and National Grid PLC.

Diversified Energy Company PLC, with 100% revenue exposure to the US, should get a boost under the scenario, with Liberum also highlighting SThree PLC, Glencore PLC, Weir Group PLC and IMI PLC.

SThree and Weir’s exposure to renewable energy and transitional technology could place them among the losers too though, Liberum said, which also includes Keller Group PLC and Balfour Beatty plc from London.

“Investors have to prepare for a complete stop and reversal of all ESG initiatives by the US government,” the bank added, including Biden’s US$369 billion Inflation Reduction Act, aimed at fuelling green technology development in the US.

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US Trump ESG US election Green finance