Investors and asset management professionals are probably not normally focused on opinion polls, but some current ones should concern them. Fox News, no less, reported on April 23 of a poll that found 56% of US voters disapprove of President Donald Trump’s handling of the economy, with 58% critical of his track record on tariffs, and 59% critical on inflation.
The figures reflect findings in other polls and the opinions among financial professionals. It will therefore be very interesting to see how much of the administration’s policies survive past the mid-term elections next year.
But in some very ironic respects, the damage may have already been done. The contagion effect of the administration’s policies may have terminally infected the entire thesis against sustainable investing.
There are some respectable arguments for excluding ESG and sustainability criteria from investment. Aside from practical questions such as conflicting and confused methodologies, there is the principle of fiduciary responsibility. Some interpretations of this hold that investment managers have a responsibility to secure the best returns for investors, period. Such interpretations usually exclude any extraneous calculations of social or environmental, or even ethical considerations. They may be open to challenge on many grounds, but utility is rarely one of them.
Until now. For, the exponents of sensible, well-argued objections to sustainable investment and ESG may see their positions damned by association, just as they see their ties to the administration dragging them down. If anything, anti-sustainable investing may be a major financial casualty of the administration. Pro-sustainability propositions are practically becoming a badge of pride and a pushback in Europe, China and beyond.
Meanwhile, the more sensible and practical conservative investors and financial regulators in the US are being compelled to stand behind the Trump policies – and to be tarred with the same brush.
The US asset management and financial services sector dominates finance worldwide. But with a possible US debt crisis and the abandonment of the US dollar and assets as safe havens, and the increasingly adversarial nature of US policies, it is questionable how much that weight of capital will continue to direct the priorities of the global financial system. Thanks to Trump, it’s already shedding value. And more disciplined and concerted policy execution elsewhere is likely to guide the sustainability-focused future of global finance long after his term ends.
