Global market forces and momentum behind sustainable energy alternatives mean Donald Trump will struggle to revive the US coal industry, as he pledged during his election campaign, Axa Investment Managers’ global head of responsible investment says.
Coal has rallied strongly following Trump’s presidential election win last week, with Peabody rocketing 49 per cent the day following his successful White House bid.
However, the divisive president-elect, whose election has already sparked protests in cities across the US, may galvanise support in the sustainable investing sector.
While Democratic nominee Hillary Clinton’s approach was plan “skill set evolution” for ex-coalminers in states like West Virginia “Trump was not coming in with that stance”, Matt Christensen says.
“Even if he wants to send a lot of subsidies that way, what is Trump there to do? If there’s one thing we know about Trump he loves to win.
“If winning and reviving the coal industry do not look like they are compatible I don’t think he will do it.”
Christensen says global trends around coal are that it is becoming increasingly less profitable over the long term.
Trump “will have tossed in a lot of ideas and ways to motivate the base” that will struggle in reality, Christensen adds.
On the other hand, a strong backlash against Trump could galvanise investors who want to align their portfolios with their values by eliminating harmful externalities as much as possible or even creating positive social and environmental impact.
Christensen says he noticed a shift towards ESG investing in the US around four years and he does not “see that long-term trend stopping”.
“You could argue part of the reaction to a Trump presidency might be to further galvanise some of the student movements we’ve seen that have gone into fossil fuel divestment on campuses, that have forced a lot of endowments and state pension funds to think about what they should do around this topic.”
Up until Trump’s election the US had been leading in the green investment space alongside Australia and Europe, particularly the Netherlands, France, Switzerland followed by the UK, Germany and Scandinavia.