Trump’s Anti-ESG Movement Threatens the Future of Green Finance
Trump’s return to power may hinder green finance efforts, as banks shift away from ESG commitments amid rising anti-ESG sentiment.
Trump, ESG, Green Finance, Wall Street, London, USA, UK
New York: So, it looks like the whole green finance thing is taking a hit. Remember when Mark Carney was all about getting banks on board with net zero? Well, those same banks are now backing away from his green finance alliance. Just last week, big names like Citi and Goldman Sachs decided to cut ties.
It’s kind of wild how quickly things have changed. A few years back, everyone was eager to show off their green credentials. Now, many are just going quiet or even ditching those commitments altogether. This shift is especially noticeable in the U.S., but it’s also happening in London.
In the City, money managers are starting to shy away from the term “green finance.” A lot of funds are even dropping their promises to invest sustainably. The Financial Conduct Authority in the UK has rolled out new rules to help investors understand what they’re putting their money into, but it seems like most funds aren’t even bothering to apply for the new labels.
Out of over 400 UK funds claiming to be ESG, only about 43 have applied for a label. That’s a pretty low number! It seems like there’s just not enough demand for these green funds anymore, especially with the anti-ESG sentiment growing in the U.S.
Marco Rubio and other GOP figures have been vocal about their opposition to ESG, claiming it pushes a leftist agenda. And with Trump back in the picture, his pro-fossil fuel stance is likely to fuel this movement even more.
Wall Street is already distancing itself from pro-climate groups as Trump gears up for another run at the White House. The Climate Action 100+ alliance has seen a bunch of departures recently, which is telling.
In the UK, the FCA’s new sustainability labels are meant to prevent “greenwashing,” but they’ve also highlighted the retreat from green finance. Many funds are now changing their investment policies to avoid any mention of sustainability.
It’s a bit of a mess, really. There’s a noticeable drop in demand for ESG investments, with more money expected to leave these funds than come in for the first time ever in 2024. It’s a stark contrast to just a year ago when sustainability was all the rage.
Even in Europe, there’s a similar shift happening, especially with the war in Ukraine forcing countries to rethink their energy strategies. Major nations are turning back to coal, prioritizing energy security over climate goals.
So, it seems like the green finance movement is facing some serious headwinds. The FCA acknowledges that it’s still early days for their new rules, but the slow uptake of sustainability labels is concerning. It’s a tricky situation, and it’ll be interesting to see how it all plays out.
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