Interpreting Trump on ESG
The Lens has always been impressed by the funds industry’s ability to adapt to an ever-changing world, no matter what economic or geopolitical events take place across the globe. So last week we were considering how the industry would digest and interpret Trump’s bizarre recent speech about wind and what this might mean for ESG. If you missed, here’s the transcript.
“I never understood wind. I know windmills very much, I have studied it better than anybody. I know it is very expensive. They are made in China and Germany, mostly, very few made here, almost none, but they are manufactured, tremendous – if you are into this – tremendous fumes and gases are spewing into the atmosphere. You know we have a world, right? So, the world is tiny compared to the universe. So tremendous, tremendous number of fumes and everything. You talk about the carbon footprint, fumes are spewing into the air, right spewing, whether it is China or Germany, it’s going into the air.”
It’s difficult to imagine any other time in history when, if the leader of the free world had made a speech like this, it would not have led to an immediate loss of faith in the political system, a market crash and an immediate recession. Yet in the week that followed this speech in December, the MSCI World Index ended the year up 24%, the UK FTSE 100 was up 12%, the Europewide Stoxx 600 was up 23%, China’s CSI 300 was up 36%, Japan’s Nikkei was up 18%, and the US Nasdaq was up 35%. In the US itself, the S&P 500 was up 28%.
Consequently, the conversation amongst fund managers appears to be that Trump may have been signalling his ongoing support for carbon-based industries – but that this would unlikely lead to any drop in support for ESG.
This seems like the most accommodative way to interpret it.