Post-Election Uncertainty — Opportunities for SRI Investors — 4: Environmental Issues

While we can’t be certain whether the immediate financial-market reactions to his election will continue for the length of a Trump presidency, we think that some of the policies proposed by the incoming administration give even more reasons than ever to make sure that your investments are aligned with your values.

In Part One, we posted on proposed changes to the tax code. In Part Two, we wrote about probable impacts on international trade. Part Three was about Trump’s efforts to reduce government regulation. Today, in Part Four: the environment.

 

4: Environmental Issues

There’s a lot that the Trump administration could do to change America’s environmental policies, and it appears that Trump is poised to start making changes soon after being sworn in. He has been very clear that he wants to “abolish the EPA”, and initially indicated that his first choice to lead the agency (for as long as it may exist) is “one of the best-known climate skeptics”, Myron Ebell — but has now officially nominated Scott Pruitt, currently Oklahoma’s Attorney General and someone who is involved in multiple lawsuits against the EPA, to be the EPA’s “Administrator”. Trump has long said he wants to scrap the Paris Agreement, and he is apparently looking for “quick ways of withdrawing” from it and a host of other international climate agreements. And since President Obama pushed the “Clean Power Plan” forward with executive orders and EPA “regulatory findings”, the Trump administration might be able to undo that plan quickly and easily. Trump has long claimed to be an environmentalist, but these moves make that hard to take seriously.

On the other hand, there may be some reasons for hope yet. Although Trump spent a lot of time talking about how he wants to bring back coal, it’s almost certainly not going to happen. The coal industry is “all but dead”, and “for every coal [-fired power] plant completed worldwide, two proposed coal plants have been shelved or cancelled” — and renewable energy appears to be gaining ground on traditional power sources too quickly to be stopped. Quite how Trump could go about removing the Clean Power Plan is not entirely clear, since there are a variety of lawsuits still working their way through the court system, which would complicate any attempt to undo the Plan. The EPA is probably too well entrenched to simply abolish the Agency, or even significantly damage its long-term ability to maintain our environment. And Trump’s plan to abandon the Paris Agreement has been met with scorn from the other signatories, and maybe more: the former President of France, Nicolas Sarkozy, has proposed a European carbon tax on American goods if we do pull out of the Agreement. The rest of the world “will figure out a way to stay on course”, according to The Economist.

What can we do to impact the Trump administration’s environmental policies? The Administrator of the Environmental Protection Agency is a “cabinet-level” post, and a President’s nominee for the post must be confirmed by the Senate. So as citizens, we should contact our Senators and let them know that we don’t want them to confirm an EPA Administrator nominee who isn’t serious about, you know, protecting the environment — and contact our Representatives and let them know that we want them to keep the Clean Power Plan in place. As investors, we can support the organizations and business groups that are already urging Trump to stick with the Paris Agreement, like the “more than 360 businesses and investors” who signed such a letter in November. We can consider moving our investments out of companies that damage the environment, if we haven’t already; it’s relatively easy to find out, for example, how much of your existing portfolio might be invested in fossil fuels, using portfolio analysis tools like Fossil Free Funds. And if you’re ready to divest, Horizons can help you to implement a “Zero Carbon Energy” portfolio, since we’ve been running those for a little more than three years now. But if you have some companies in your portfolio from which you can’t simply divest (for tax reasons, say), or if you would rather be somewhat more combative with egregious polluters, we are always looking for investors who want to work with us and our industry partners (like As You Sow) to “turn up the heat” with shareholder advocacy efforts. Contact us today, and we can help you get started!

 

Next — Part 5: Civil Society, Civil Rights