US asset owners are ‘greenhushing’ following Trump action on ESG
US president Donald Trump has taken action to crack down on ESG investing, which has led to asset owners enaging in ‘greenhushing’ as they continue to invest in these assets (Reuters/Leah Millis)
ESG remains an important factor in asset owner investment decisions despite the actions of the Trump administration, according to Amin Rajan, chief executive of Create-Research.
US president Donald Trump has pulled the US out of the Paris Agreement on climate change and has issued an executive order to prevent states from enforcing action against climate change. The president himself has described climate change as a “hoax”.
The regulatory, ahem, climate in the US has led to concerns that American asset managers are not as committed to ESG as they once were - which in turn has led some European asset owners to end their relationships with them.
But Rajan said demand for ESG remains strong around the world - including in the US.
He said: “There is a good deal of interest there, no doubt about it. Various surveys have shown that even in the US where the backlash against ESG is so strong institutional investors have really stuck to their guns.
“Ok, they are not calling it ESG investing but what they are doing is they are factoring in all the ESG risk in their portfolio so there is quite a lot of ‘greenhushing’ going on in the States.”
Rajan said that in Europe and Asia ESG was “very much alive and well”.
He said: “It is just a matter of time before we markets pricing in these risks but at this point in time markets are not very sure where the agenda of the Trump administration is going to lead as far as ESG is concerned.”
Rajan said climate change risk was one of the two biggest challenges faced by asset owners - the other being the rise of geopolitical risk.
He said: "There is grave uncertainty about what [the policies of the Trump administration] is going lead to and what kind of world order is going to emerge from it.”