The News
Progressive corporate efforts on climate and diversity faced a difficult year — but 2025 will offer little respite, analysts said.
On both sides of the Atlantic, “the green march began to stumble” in 2024, a Financial Times columnist argued, despite Europe’s past progress on environmentally-friendly policies.
The return of US President-elect Donald Trump, who is broadly seen as far more climate skeptic than his predecessor, means that “fraught green politics are by no means at an end,” she added.
The incoming administration is already preparing to target diversity, equity, and inclusion programs, with one of his advisers telling The Wall Street Journal, “the pendulum is swinging back and swinging back very hard against DEI.”
SIGNALS
ESG faces criticism from both the left and the right
Environmental, social and governance investing (collectively known as ESG) has become a “decisive loser,” facing criticism both from the right and environmentalists, a Bloomberg columnist wrote. US interest in ESG has dwindled, with less money invested in clean energy stocks and ESG funds. On the political right, the term has become a target for attacks, while even some former ESG advocates have called for scrapping the moniker, arguing it such efforts have largely become a heavily politicized box-ticking exercise that have outlived their purpose. Several big ESG funds have faced fines for “greenwashing,” or selling sustainable funds that were quietly investing in fossil fuels.
Cuts to environmental regulation unlikely to be ‘game over’ for green investments
US climate and ESG-related financial and labor regulations are likely to be cut under the Trump administration. Even so, ESG investors told the Financial Times that scenario would not mean “game over” for sustainable investments, arguing that outgoing-US President Joe Biden’s green tech subsidies are likely to continue creating investment opportunities. One sustainable investment expert told Reuters that even if the federal government cuts red tape, regulation by the European Union and even some states like California “mean [corporations] still have to engage in stringent climate disclosures.” In some cases, investors will likely continue pursuing ESG policies that make financial sense, a sustainability expert at BSG said: “Investors will seek value by avoiding risks and betting on new, efficient green tech.”
Trump set to roll back federal DEI initiatives
While some big US firms have started rolling back diversity, equity and inclusion (DEI) programs in 2024, the incoming administration is expected to wage war against such initiatives. Trump has vowed to scrap federally funded diversity programs, and conservative think tanks have floated further measures including enforcing against DEI training involving critical race theory, the Harvard Business Review reported. Ultimately, “DEI will not die,” The Economist predicted, “but will instead undergo a makeover before returning in a more modest form.” Most companies could tone down rhetoric and lower diversity targets, but fair hiring practices and workplace inclusivity efforts are likely to remain, the outlet argued.