President-elect Joe Biden has made clear his green agenda when he assumes office on January 20th, 2021.
Dr Pooja Khosla, Vice President, Client Development at Entelligent – a firm specialising in smart climate indices, predictive equity portfolio analytics, and data – says: “Biden has proposed what may be the most ambitious programme to tackle the climate crisis of any US president. His plan includes a $2 trillion clean energy and climate change package that would be spent over four years: supporting renewable power, overhauling heavy industry, transportation and electricity. Biden’s goal is a carbon and pollution-free power sector by 2035, with net-zero emissions throughout the economy by 2050.”
Biden has also proposed leveraging federal tax credits and streamlining regulations to incentivise the manufacture and adoption of renewable energy – including massive federal investment in grid modernisation.
Plenty of choice
Biden’s green agenda could encourage more asset managers, governments and banks globally to offer more environmentally financial services products to investors.
Bram Bos, lead portfolio manager of NN Green Bond fund at NN Investment Partners, says in a recent article in Investment Week, heavy investment in sustainable infrastructure and clean energy under the Biden administration could lead to an inaugural green US Treasury issue and further boost the global green bond market.
Over in the UK, M&G has launched a climate-focused impact fund. The M&G Climate Solutions fund will invest in a portfolio of around 30 companies, for each of which it will provide investors with a report on the net positive climate impact and revenue alignment with climate-related UN Sustainable Development Goals.
Lombard Odier Investment Managers (LOIM) has launched a new high conviction global equity strategy, inspired by His Royal Highness the Prince of Wales, which will invest in public companies that “leverage the regenerative power of nature” in the belief they will deliver strong growth to investors, as reported in Investment Week.
In addition to this, the government will launch its first green bond in 2021 “to capitalise on growing investor interest in assets designed to fund environmentally-friendly spending.”
The market for green bonds has expanded rapidly in recent years with about $250 billion (£190 billion) sold globally last year, or 3.5% of global bond issuance, according to news agency Reuters.
Declan McAndrew, head of investment research at Foster Denovo says: “Sustainable infrastructure renewal and clean energy policies were key tenets of the Biden presidential campaign. Pledges to re-join the Paris Agreement on his first day in office and a commitment to a longer term net zero emission target are clear signals that the US government will once more be at the forefront of climate change solutions, rather than an outlier dismissive of the scientific evidence.
“Whilst some of the scope of Biden’s considerable ambitions for the US economy may be partially tempered by the Republicans likely retention of the Senate, it is an important boost to sustainable investing in terms of spending impetus, positive influence and global leadership. The US election of 2020 may be seen in years to come as a significant development for investing as well as for climate change.”