The SRI (Sustainable, Responsible, Impact Investing) conference took place recently in Denver, and it is a three-day conference that brings together asset owners, asset managers, and other investment professionals in the ESG, shareowner advocacy, and impact investing space. The conference is in its 27th year, and given that the conference took place in mid-November—right after the U.S. election results—a great deal of discussion centered on what will become of U.S. climate change policy under a Trump presidency.
The greatest concern was targeted on what the new administration will do in regard to the U.S. climate pledge made by the Obama administration at the COP 21 Paris agreement in December 2015 (see Exhibit 1). During his campaign, President-elect Trump had labeled climate change to be a hoax and vowed to undo the Paris agreement and back out of the USD 100 billion global climate fund to help poorer nations with climate change transition. However, in recent, post-election interviews, he has conceded that there is some connection between human activity and climate change and pledged to have an open mind toward the Paris agreement.
Should the Trump administration ultimately decide to withdraw from the Paris agreement, there are a few different avenues to do so, and they can be pursued simultaneously. While the president cannot unilaterally cancel the Paris deal, he could begin the lengthy process of officially withdrawing the U.S. from the agreement, which is officially already in effect. The lengthiest option is the official withdrawal, which mandates that a country must wait three years to pull out, and once it makes that decision, it must wait another year to actually do so.
Option two would be to withdraw from the parent agreement, called the United Nations Framework Convention on Climate Change (UNFCCC), which has been in effect for 22 years. That agreement allows countries to withdraw with one year’s notice, automatically withdrawing them from any deals that are a subset of the UNFCCC, including the Paris accord. Option three would be easier and faster, but it would require the issuance of an executive order requesting the U.S. Senate to ratify the deal, which it is unlikely to do so.
Given that the new president-elect is moderating his viewpoints from some of the more controversial and polemic comments made during the campaign, what the new administration’s energy policy will shape up to be is a guessing game. For me, the lasting and most salient takeaway from the SRI conference was that the SRI community and its participants represent a formidable proponent who will continue to take action on climate change regardless of government administrations and differing policies. Some of the large asset managers have already joined the 360+ signatories of a new letter at lowcarbonusa.org calling on Trump for continued participation in the Paris agreement. In my next post, I will discuss how the SRI community has mobilized and become a powerful force to reckon with.The posts on this blog are opinions, not advice. Please read our Disclaimers.