Will today’s US policy set back the green agenda?

If you listen to the general media moping and misery, you would think that green and sustainable goals have been irrevocably set back a decade just because DT got into the White House.

Isn’t that a little naïve?

A cynic would say, how much damage to sustainable momentum could be achieved in four years?

Actually, probably rather a lot, if the truth be told.

There’s plenty of chat about rewinding the Inflation Reduction Act, and increasing fossil fuel extraction, and so on. But do we really think that will turn back the momentum that has already been established?

I would suggest not.

Item number one: green finance.

There’s already a massive market in green bonds and funds issued on the market. The desire from investors to invest in green or sustainability-linked instruments is strong. It’s underway. It’s got serious investment volume in the international public markets. And that’s not going to change.

Why not?

Because of item number two: Europe’s legislature makes sustainability reporting mandatory. All quoted firms over a certain size need to do it. There’s no backsliding.

If you have to report your green/sustainable footprint, then whatever’s happening in the USA is immaterial. And it’s not just your scope 1 and 2 emissions (own emissions and power consumption types) that have to be reported. You also have to report your scope 3 emissions – up and down your supply chain. That means larger companies are insisting that their suppliers come with good green and sustainable credentials that basically help improve the larger company’s footprint.

OK, even though there are these tender requirements for the supply chain, are they quietly waived from time to time? Sure they are. Sometimes. But not most of the time. And I don’t think that management in most instances will tolerate bending the rules just to get a better price. Any persistent hoodwinking of this sort will be found out… and when the truth hits the markets, oh my goodness watch the scandal unfurl and demolish the share price!

Finally, item number three. What about the USA itself? It is, after all, the world’s biggest economy… by a good long way. Are US companies going to totally retrench on green and sustainable?

Maybe somewhat, but not by much, I think.

US firms often have markets in Europe. Selling to Europe means following Europe’s rules. So if you’ve developed your product to be greener and more sustainable for the European markets, you’re not going to sell a less compliant version into the US, are you? And the Chinese have now introduced sustainability reporting rules for their larger quoted companies. So it’s not only Europe forcing up the standards.

What’s the conclusion?

Keep calm and carry on.

There may be a little downturn in the sustainability pressure, but the general direction of travel is set.

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