The reintroduction of the US into the Paris Climate Change Agreement is “optimistic” for the US as it means the US is embracing environmental, social and governance (ESG) trends.
The US was far behind Europe when it came to ESG but this move proved President Joe Biden was putting climate change at the front of his agenda with the US re-joining on 19 February.
The US withdrew from the agreement under President Donald Trump in November 2020, having first announced the move in June 2017, after Trump described climate change as a ‘total con job’. The US was the world’s second-largest greenhouse gas emitter in the world after China.
The Paris Agreement aimed to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2°C above pre-industrial level.
Hamish Chamberlayne, head of sustainable equities at Janus Henderson, said: “We see some very persistent and bankable investment trends that are closely aligned with sustainability and our investment framework. We do expect to see some reversion to old norms, as the vaccines are rolled out, but we believe this pandemic has accelerated and cemented some trends such that many of the societal and economic changes we have experienced will prove durable.
“With the EU and China also escalating their commitment to green investment and decarbonisation, the stars are aligning for a globally-synchronised clean energy and technology investment boom.”
Kate Turner, responsible investment specialist at First Sentier Investors, said: “The change of President in the US, the country re-joining the Paris Agreement and the ongoing changes in demand will all have significant consequences for energy companies.
“We anticipate that renewable energy will continue to take market share and this will only be accelerated if the Biden administration puts a Federal price on carbon.”
Andrew Howard, global head of sustainable investment at Schroders, said: “Biden’s pledge to rejoin and to commit the US to a net zero emissions reduction target by 2050 is expected to mean significant investment into green industries and technologies. He has laid out a US$2 trillion ($2.56 trillion) clean energy and infrastructure plan. It will also require tighter regulation of higher-emitting industries, including oil and gas, utilities and autos”.
