Donald Trump is back in power and immediately cut off his predecessor’s environmental initiatives. Oil, gas, and coal are back on the agenda. Is investors’ appetite for green investment so great that they defy the new framework?
Just back in the White House, US President Donald Trump dramatically shifts regulation in favor of fossil fuels. «This reduces the pressure on companies to implement sustainability and ESG principles», explains Hans Selleslagh, Switzerland spokesperson for the online broker Freedom24. And he continues: «The short-term impact of Trump’s policies on renewable energy and sustainable technology companies is negative. Trump’s rejection of ESG, diversity, and inclusion initiatives, as well as his instruction to audit companies that implement ESG strategies, create an unfavorable environment for sustainable investment.» But the momentum for sustainability and green initiatives has been stronger in Europe, too. In Germany, for example, sports car manufacturer Porsche recently announced that it will focus more on internal combustion engines in the future – demand for electric cars in Europe is too weak.
Europe as a solid counter-model?
Despite these developments, the situation in Europe is fundamentally different from that in the US, Selleslagh explains. «Various regulatory measures in the EU, but also in the global context, have created a framework in which companies around the world are required to implement ESG practices», Selleslagh stresses. US companies, too, cannot ignore international developments and requirements. And even if the promotion of sustainability is temporarily not the top priority in some European countries, EU policy is a considerable counterweight to current US policy, according to the Freedom24 expert. «Binding targets, such as cutting greenhouse gas emissions by 55% by 2030, limit the room for maneuver of individual state governments. Moreover, the energy crisis triggered by Russia’s attack on Ukraine has accelerated the transition to renewable energy within the EU as member states seek to reduce their dependence on fossil fuel imports», Selleslagh stresses.
Germany, for example, has earmarked €200 billion for initiatives in the area of green energy in response to the crisis. Even among CEOs, investment in the area of sustainability is probably undisputed. For example, in the latest CxO Sustainability Report by consulting firm Deloitte, 85% of companies surveyed said they had increased their sustainability investments in the past year.
Even in the US, demand for clean electricity is rising, despite Trump’s unfavorable policies for renewables. «According to the US Energy Information Administration (EIA), solar power generation capacity will increase by 26 gigawatts in 2025 and another 22 gigawatts in 2026, corresponding to growth rates of 34% and 17%, respectively», Selleslagh said.
Sustainability remains a relevant factor for investors
«Trump’s policies are a setback for ESG investments and sustainable actors, but they do not change long-term, fundamental trends», Selleslagh says. Demographic trends are driving the demand for sustainable solutions, as awareness of environmental and social responsibility is high among the younger population. «Investors who have recognized the importance of sustainability factors are increasingly aligning their portfolios with ESG principles and ensuring a continuous flow of capital into green industries», Selleslagh emphasizes.
At most, policy can influence the pace and extent of economic and social change. Investors are interested in ESG investments not only for ethical reasons, but also because sustainable companies are more stable in the long run and better equipped to meet future challenges. Solar and wind energy, for example, are becoming increasingly competitive, even with the independence of subsidies. «With increasing regulation in Europe and the continued growth of the renewable energy market, sustainability investments will remain an important component of the global financial landscape», concludes Selleslagh.
About Freedom24
The retail broker Freedom24 with its head office in the EU is a European subsidiary of Freedom Holding Corp., a NASDAQ-listed international investment group that serves around 555'000 clients worldwide and has a market capitalization of 7 billion US dollars.
