Trump and the anti-ESG movement: Impact on renewable energy

The decline in sustainable investments in recent years is primarily due to the weak performance of the clean energy sector and the impact of inflation and high interest rates. Morningstar data shows that sustainable fund outflows have been ongoing for three years and are therefore not directly attributable to Trump's policies. Clean energy and tech sectors were particularly affected, recording significant outflows.

The Inflation Reduction Act (IRA) is also likely to be less affected than often assumed. A complete repeal of the IRA seems unlikely, as 80 percent of investments to date have gone to Republican and swing states. In addition, the IRA enjoys strong cross-party support. Companies can still plan and invest under the previous conditions for several years after any changes to the law thanks to so-called safe-harboring orders.

With regard to electromobility, Trump has withdrawn some regulations to promote electric cars, but the long-term trend towards electrification remains. US carmakers have invested heavily in EV production and are under considerable competitive pressure from foreign manufacturers. Especially in traditionally Republican states such as Tennessee and Georgia, EV projects are economically significant, making the complete abandonment of this strategy unlikely.

Uncertainty remains with regard to customs policy. However, sustainable companies are unlikely to be more affected than conventional industries. Tariffs could have a noticeable impact on the copper, aluminum and automotive industries in particular, although no consequences are expected that could threaten their existence.

The recent anti-ESG movement has also had little concrete impact on the environmental sector so far. The withdrawal of prominent companies from global climate initiatives and the reduction of diversity, equity and inclusion measures primarily affect social issues and less sustainable energies directly.

Resource efficiency sector with high growth opportunities

Despite the political uncertainties, there are still investment opportunities for investors. The resource efficiency sector in particular promises high growth opportunities. Niche markets such as heating pumps or enzymes are characterized by robust margins and are less affected by political risks or interest rate developments.

Investors could also benefit from a targeted focus on companies with a strong market position. Companies with solid earnings prospects are more resistant to political uncertainties and economic fluctuations.

In addition, increased diversification into European markets is worthwhile. The latest EU measures, in particular the Clean Industrial Deal, send out clear signals for the expansion of renewable energies and the improvement of energy efficiency. The planned installation of 100 gigawatts of additional renewable capacity per year by 2030 and the increase in the proportion of electricity from renewable sources from the current 23% to 32% are key drivers for investment opportunities.

The increasing demand for electricity due to reindustrialization, electromobility and the need for AI data centers will continue to drive the expansion of renewable energies. Their cost competitiveness will remain a stabilizing factor.

Although Trump's political measures are causing short-term uncertainty, the fundamental growth potential of renewable energies and sustainable investments remains intact. Investors can benefit from strategic adjustments such as a focus on resource-efficient companies and regional diversification.