Biden makes ESG investing a key focus of new administration
Newley elected US President Jo Biden’s expected regulatory changes will push environmental, social and governance (ESG) investing “to become the ultimate megatrend,” says deVere Group CEO Nigel Green.
President Joe Biden has picked Gary Gensler to head the Securities and Exchange Commission (SEC), the US financial regulator.
Joe Biden’s administration is going to usher in an era of serious momentum for responsible and sustainable investing.
This is not just because of the likely tougher approach to the use of fossil fuels and his campaign’s vow to take swift action to tackle the climate emergency.
It is also because of the expected appointment of Gary Gensler to lead the SEC, who is likely to heavily reform and broaden ESG investing and corporate disclosure rules in the US.
In doing such, we can assume that Gensler would have the major support on the Commission.
For instance, upon her appointment as acting SEC chair, Allison Herren Lee said that during her time as a Commissioner, 'I have focused on climate and sustainability, and those issues will continue to be a priority for me'.
In The New York Times she wrote that: 'Both investors and the broader public need clear information about how businesses are contributing to greenhouse gas emissions, and how they are managing — or not managing — climate risks internally. Realistically, that can happen only through mandatory public disclosure'.
Should the SEC push ahead with beefing-up green investment rules, as is expected, it will close the transatlantic gap that has emerged in recent years as the European watchdogs pushed ahead with increased stricter ESG investing and disclosure regulations.
At the beginning of 2020, I described ESG investing as a ‘megatrend’ of the decade. And throughout the year inflow doubled and ESG funds outperformed the market.
But the tag ‘megatrend’ would now seem somewhat underplayed if the US moves towards ESG-related regulatory reforms and comes into line with Europe.
Responsible investing will become the ultimate investment megatrend should this happen.
The likely rule changes in the US on ESG investing and corporate disclosures are not as yet heavily priced-in to markets.
Investors should keep a keen eye on this area and move to take advantage of the opportunities.
NB: In a move to encourage clients to consider the ESG opportunities, last month deVere Group announced it is planning to offer free, independent advice on socially responsible investing, with the aim of positioning $1BN in environmental, social and governance (ESG) investments within five years.
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $12BN under advisement.