The Impact of the Trump Presidency on Sustainable Investing in 2025

Donald Trump’s returns to the White House in 2025 could have a significant impact on sustainable investing in the United States. Throughout his first term, Trump pursued policies that often favoured deregulation, the promotion of fossil fuel industries, and a more market-driven approach to environmental issues. With a second term, these themes could resurface, altering the landscape for investors focused on sustainability and social responsibility. Here’s a closer look at how the Trump administration’s policies could shape sustainable investing in 2025 and beyond.

Reduced Regulatory Pressure on Sustainability

During Trump’s first term, his administration made several moves to roll back environmental regulations, arguing that many of these policies were burdensome for businesses. This included withdrawing from the Paris Climate Agreement, reducing emissions standards, and relaxing regulations around energy production from fossil fuels. With a Trump returns to office in 2025, it is likely that he will continue to prioritize deregulation, especially in the energy sector.

For sustainable investing, this could mean less emphasis on enforcing ESG (Environmental, Social, and Governance) disclosures and sustainability metrics for companies. Investors who prioritize green and sustainable investments may find that the lack of regulatory pressure results in slower adoption of sustainable practices among U.S. companies. This could impact the pace at which sectors such as renewable energy, clean technology, and sustainable infrastructure are able to grow in the U.S.

Fossil Fuel Industry Promotion

Trump’s previous administration was characterized by strong support for the fossil fuel industry, including the promotion of coal, oil, and natural gas. Under a second term, this policy would likely continue, with a focus on energy independence and domestic production of fossil fuels. Such a stance could dampen the long-term growth of renewable energy markets in the U.S.

For sustainable investors, this could present challenges. A policy environment that favors fossil fuel companies may lead to diminished returns for investments in green energy sectors. However, it could also create opportunities for investors who choose to focus on traditional energy sectors, as government subsidies and incentives for fossil fuels could make these sectors more attractive in the short term.

Impact on Clean Energy Transition

While Trump’s stance on renewable energy was often more sceptical, the clean energy sector may still experience growth in 2025 due to global market trends and private sector innovation. Even if the Trump administration continues to minimize federal support for clean energy, investors may increasingly look to markets outside the U.S. for sustainable investments.

In 2025, countries like China and members of the European Union will likely continue to lead the charge in transitioning to green energy, regardless of U.S. policy. While the U.S. might lag in federal support, the private sector could play a critical role in advancing renewable energy technologies and innovation. Investors with a global outlook could focus on international companies involved in renewable energy, electric vehicles, or energy storage.

Potential for Corporate Responsibility to Shift

During Trump’s first term, the administration worked to reduce the scope of corporate social responsibility (CSR) requirements. A second Trump presidency may continue this trend, with a focus on deregulation that reduces pressure on corporations to address social and environmental issues comprehensively. The Securities and Exchange Commission (SEC) and other agencies might not push for stricter ESG reporting requirements, making it harder for investors to assess a company’s sustainability practices.

For sustainable investors, this could pose a challenge in terms of transparency. With fewer requirements for sustainability reporting, it might be difficult to evaluate which companies are genuinely pursuing sustainable practices and which are simply engaging in “greenwashing.” Investors who rely heavily on ESG ratings and disclosures may find that they need to seek out alternative methods to assess companies’ sustainability initiatives, potentially leading to less informed investment choices.

Tax and Incentive Policies for Sustainability

One area where Trump could have a more direct influence on sustainable investing is through tax policies. In his first term, Trump enacted significant tax cuts, and any future tax reform under his administration could favour businesses that produce traditional energy sources or offer limited incentives for green technologies. If incentives for renewable energy production or energy-efficient infrastructure are reduced, investments in these sectors may see less government support.

However, certain private-sector-driven green projects might still be attractive to investors, especially if they align with technological advancements or consumer demand for sustainable products and services. Tax incentives that encourage clean energy development and green infrastructure may be more limited under a Trump presidency, but opportunities could still emerge in sectors such as sustainable agriculture, electric vehicles, and green bonds.

Investor Activism and Corporate Accountability

While Trump’s first term was marked by a relatively hands-off approach to corporate governance in areas like environmental protection, investor activism may still play a role in driving sustainable practices. Shareholder demands for greater corporate responsibility on climate change and social issues may push companies to take action, even in the absence of strong government regulation.

However, under a Trump presidency, there may be a greater emphasis on “free market” solutions rather than government-mandated action. Corporate decisions may be driven more by shareholder interests and profit motives rather than pressure to meet social or environmental goals. Investors focusing on socially responsible investing (SRI) might find it more challenging to push for changes through formal channels and may need to explore alternative means of influence, such as direct engagement with companies or investing in funds that emphasize shareholder activism.

Global Context and U.S. Isolationism

Trump’s “America First” foreign policy stance during his first term suggested a move toward isolationism, which could influence U.S. participation in global sustainability initiatives. The United States may not play as central a role in shaping global climate agreements or sustainable investment frameworks, potentially reducing the influence of U.S. investors on international sustainability standards.

While U.S. investors might focus more on domestic opportunities in a Trump-led future, global sustainability trends—driven by other countries and multilateral organizations—may continue to create opportunities for sustainable investments outside the U.S. Renewable energy companies in Europe and Asia, for example, may attract attention as global demand for green technologies rises, regardless of the U.S.’s stance.

Conclusion

A second Trump presidency in 2025 would likely bring a continuation of policies that emphasize deregulation, energy independence, and a market-driven approach to sustainability. For sustainable investing, this could present both challenges and opportunities. While U.S. support for green energy and environmental regulations may remain limited, international trends, technological innovation, and investor activism may continue to fuel growth in sustainable sectors. Investors will need to adapt to the shifting political landscape and consider a more global approach to sustainable investing, seeking out markets and companies that align with their values despite domestic political shifts.