Sustainable investors have key role to play in mitigating the impact of Trump’s ditching of Paris climate accord
President Trump’s decision to withdraw the U.S. from the Paris climate agreement is more symbol than substance, part of his America First economic nationalist ideology, which he has had difficulty applying so far in his administration. It is easier to announce that he is ditching Paris than it is to actually build a wall, for example, or to ban Muslims.
The administration will follow the withdrawal process laid out in the agreement, which will take nearly four years to complete. According to The New York Times, the official exit would be Nov. 4, 2020, the day after the next presidential election. A newly elected president could rejoin.
Why do I say withdrawal is more symbolic than substantive? It is a setback, no doubt, in the global movement to combat global warming and the U.S. has certainly ceded its leadership position. But I think the reaction to this will be that other countries will redouble their efforts to address climate change. And the same thing will happen within the U.S., as states, cities, universities, and corporations will continue to lower their greenhouse gas emissions to keep pace with the Paris targets.
And sustainable investors, $23 trillion strong globally, will keep pressing the companies they own to address climate risk by reducing their emissions. Just yesterday, ExxonMobil shareholders, representing 62.3% of shares outstanding, passed a resolution asking Exxon to report on the risks of climate change policies, such as those contained in the Paris agreement, and the shift to renewable energy.
It’s not hard to convince large asset owners, such as pension funds, universities, and other large endowments and foundations, to invest sustainably. They understand the impact their assets can have, particularly when joined with those of other large asset owners. And they understand that over the long run, their investments are more likely to be financially successful if the companies they hold operate in a world where climate risk has been mitigated and even more successful if their portfolios are tilted towards companies best positioned to thrive in a low-carbon economy.
Everyday investors, families and individuals, large and small, should be doing the same thing. Surveys show overwhelming support for sustainable, impact investing, particularly among women and younger investors. The more dollars invested this way and the wider the coalition of sustainable investors, the greater the impact.
If you disagree with today’s decision, one way to do something about it is to become a sustainable investor.
