Trump and ESG: What’s next following the US election

Trump and ESG: what does the future hold for this core governance concept now that one of its biggest haters has retaken the White House?

It’s official—we know the result, and far quicker than last time. Donald Trump is going to be the next President of the United States. 

Now, the business world is scrambling to understand what his second tenure will mean when he takes office on 20th January, 2025. 

For ESG, the future has been unclear till now. Its development as a concept hinged on the election result because both major candidates offered starkly different views on where it should go from here. 

Now that Trump has won, we can finally zero in on where we think things will move next.

Donald Trump has always been the pro-business, pro-fossil fuel, and anti-regulation candidate, so it should be no surprise that he has a solidly negative view of ESG and wishes to work against it during his presidency. 

His opposition might not have been as vocal as some of his Republican competitors during the primaries, and he will likely begin his term focusing on other issues, such as immigration. Still, there should be no doubt that the issue will eventually land on his desk, and he will take decisive action in line with his personal beliefs. 

Donald Trump favours traditional energy sectors like oil and gas and has no problem spearheading investments in those areas. His priorities lie in traditional American business goals—growth and profit—over newer ones like DEI, balancing inequality and stakeholder feedback. He is also not a fan of new laws mandating more compliance from governance professionals. 

These are the opinions that will shape where ESG goes from here

Here are our top projections for its future:

Trump’s victory doesn’t spell the end of ESG. Trends around the issue come and go no matter who is in the White House, and beneath it all is a vast pool of ESG assets that Forbes still estimates will reach $50 trillion in value by 2030. 

US politics has seized the concept and swept it into political rhetoric. Given the amount of attention it gets, even those who don’t consider ESG “woke” will still consider it exhausting. 

But this rhetoric can’t undo the roots of thought around ESG, nor the fact that it remains primarily a tool for investors to compare different companies’ priorities against each other. This kind of tool is crucial for intelligent investing and is likely to remain popular in a world economy that will remain globalised regardless of Trump’s victory.

The markets will see a Trump presidency as a direct contrast to the climate-oriented policies of the current US administration. They will trade with more awareness of the growing power of the anti-ESG rhetoric, and sectors like oil and gas will see renewed popularity. 

The 2022 Inflation Reduction Act (IRA), passed by President Biden, commits the US to investing in clean energy. While experts are sceptical that Trump would manage to repeal this law altogether, they do expect that he may simply refuse to commit further funding to clean energy projects while he is in the Oval Office, further diverting attention and capital from one of the core pillars of ESG.

It was no secret that ESG was a polarising topic in the United States. However, up until now, it has mainly been a state-by-state issue. Fiscally conservative Republican governors and congresses have already passed laws restricting ESG investing. These laws starkly contrast to pro-ESG states and other jurisdictions in the Western world. 

Now, ESG will become a national hot topic, and its future will receive far more attention on the floor of the US Congress and the White House. The “pro” and “anti” lobbies will coalesce in these arenas wherever possible as they continue to battle for the future principles of American business.

Experts predict that the greenhushing might spread in response to a Trump victory. 

Greenhusing is the “radio silence” approach to environmental strategies. If a company is asked about its climate commitments, it will avoid answering. If a company isn’t asked, it won’t say anything. 

The overall goal is to remove the spotlight from climate for fear that potential criticism will outweigh any benefit of being outspoken on the issue. Pro-ESG lobbies may call out lack of ambition or greenwashing, and anti-ESG lobbies may call out “wokeness.”

In an anti-ESG Trump presidency, this trend will likely grow as companies look to distance themselves from the public mood while still appealing to stakeholders in practice. 

Similarly, we might also see added momentum to the movement against the actual name – ESG. The word has become so politicised that to mention it may cause enough backlash and debate that its true intentions will quickly become lost. In 2023, Larry Fink, CEO of BlackRock, the world’s largest investor, said he had stopped using the term for this reason, despite agreeing with its principles.

Currently, the anti-ESG movement is firmly focused on the United States. There is still opposition elsewhere in the world, like the UK and EU, but the political control in those places rests with people who think of ESG as part of natural next steps and not as a topic for discussion. 

Expect that to change with a Trump presidency. As the saying goes, “When America sneezes, the world catches a cold.” 

We should never underestimate the influence that the US has over the rest of the world, especially when it comes to things like economic direction. The people on boards and executive teams in the world’s biggest companies will be looking at the election results closely and wondering how to strategies around them. It is only natural that this thinking will filter into other countries too. 

Meanwhile, we should also acknowledge the momentum Trump’s victory will give to like-minded politicans in Europe. 

There’s a big caveat here because, as it happens, most of the continent went to the polls already in 2024, before the US election. So, the true impact on political opinion might take a while to materialise into anything tangible, but it’s still very worth watching.