Since Donald Trump was re-elected as US president, commentary around sustainable investing has been increasingly negative as the president promised to “drill, baby, drill” and exit the Paris Agreement. However, Parmenion’s senior investment manager Mollie Thornton says Biden’s Inflation Reduction Act will likely survive and there is plenty to be optimistic about.
There has been a lot of negative sentiment towards sustainability, DEI and ESG in the US. What impact is this having on the rest of the world? Should we be worried?
While a lot of the noise out of the US is quite negative about sustainability, there are US companies continuing to have a positive impact. Some companies are just going under the radar in how they talk about their activity – rather than “sustainability” they might talk about “resilience” or “efficiency” instead. But it doesn’t necessarily change what they’re doing in practise. For example, over 50% of US listed companies have made net-zero pledges (though it’s true they aren’t totally clear how to get there yet). Big tech companies like Microsoft are driving a lot of innovation in net-zero technologies and investing heavily in the space.More broadly, on a global basis, a 2025 survey by Kearny of 500 chief financial officers found 92% wanted to increase their green investments and 69% expected a higher return on investment for sustainability projects compared to conventional ones. A 2025 decarbonisation survey by PWC found 37% of companies were increasing their climate goals, versus only 16% decelerating their goals.
In addition, Europe and Asia want to reduce dependence on imported energy and renewables will be a key component of that, while electric vehicles are booming in China.
Overall, while it’s very disappointing that the US as the world’s largest economy seems to be stepping back from ESG, I do think the negative narrative is overdone and there’s lots of positive developments.
See also: Sustainable investing still makes sense in a Trump world
How much impact will the US pulling back from renewables have on that sector?
Whether the US pulls back from renewables or not, the US is only 12% of global emissions. China is around 30% of global emissions and so much more critical for the energy transition and they are continuing to strongly support this area – figures show a record of more than $2trn annual investment into clean energy in 2024, mostly led by China, followed by the EU. In addition hard economics reduce the extent the US is likely to pull back from renewables, in spite of Trump’s “drill, baby drill” comments: renewables are generally the most cost-effective source of new electricity generation.
Where are we seeing positive signs that consumers are continuing to back sustainable solutions?
There is some strong evidence of consumers backing sustainable products:
- A recent survey of international consumers by Yougov found 53% of consumers were willing to pay 10% extra for sustainable food and drink.
- Another survey from Capitalone research found 89% of global consumers have changed their shopping habits to be more eco-friendly, and the U.S. eco-friendly retail market grows 71.0% faster than the conventional retail market.
- 54% of consumers reported consciously purchasing products with sustainable packaging in the last six months, according to the 2025 Sustainable Packaging Consumer Report.
- Spending on second-hand clothes rose to over $225bn in 2024, a 15% increase vs 2023 and making up nearly 10% of all global spending on clothes, according to ThredUp Inc.
See also: Green Dream with Parmenion’s Thornton: Sustainable investment is in a healthier place
With Trump’s anti-ESG rhetoric, will Biden’s Inflation Reduction Act survive?
It is expected that most of the Biden Inflation Reduction Act will survive due to strong political support in Republican states where most of the investment has taken place, for example North Carolina, Georgia and Nevada.
The majority of the funding has been invested into battery plants, EVs and solar power. However, it’s expected that the less mature or more emerging technology (eg carbon capture and storage) are likely to struggle and see limited investment under the Act.
What are you optimistic about in this challenging environment?
Somewhat surprisingly, there is plenty of overlap between the Trump administration priorities and sustainable investing. Sustainable portfolios tend to be overweight to small- and mid-sized companies and these are set to benefit most from Trump’s proposed tax cuts. Sustainable portfolios often have exposure to stocks related to AI (semi-conductors, data centres and their supply chains), cyber security, key water and waste infrastructure, healthcare, financial services. These are all priorities for the US government.
Where are you seeing demand in sustainable portfolios from UK clients?
We are seeing strong demand for passive ESG investing. This is a relatively new area which is growing healthily quarter on quarter. Our passive ESG solution has just reached its three-year track record and is consistently seeing robust demand.
We also have a range of award-winning active ESG portfolios, with a track record going back over 13 years. Over the last 12 months, it’s interesting to see that demand has been strongest for our portfolios with strict ethical exclusions (which avoid human rights abuse, environmental damage, fossil fuels production, non-medical animal testing, weapons, gambling, adult entertainment and tobacco production).
