What could a Biden presidency mean for climate change investing?

US Flag with Wind Turbine

Joe Biden in the White House, and potentially Democrats in control of the Senate too, could turbo-charge climate change as an investment theme.

The US response to Covid-19 looks set to be the dominant election issue as we head towards the November polls. Myriad other issues also compete for voters’ attention, and climate change often takes lower billing on the US political agenda than it does in Europe.

However, the election outcome will be significant for climate change, both in terms of policy and the potential effect on related investments.

Given Joe Biden’s lead in the polls, we think investors should factor in a Democrat Administration as a base case when it comes to valuing stocks across a range of industries.

In the case of climate change the policy positions of the two parties are so different that the election outcome will be exceptionally important to the investment outlook for the companies affected. So far, the scenario of Biden winning the election is not yet incorporated into share prices, in our view.

Detailed plans for net zero emissions

Biden’s key climate pledges are, as you would expect, aligned with those of the House Democrats, who recently unveiled their own climate plan. Perhaps the most important is for the US to achieve net zero greenhouse gas (GHG) emissions by 2050, in line with the EU’s deadline in its “Green Deal” plans.

Setting distant deadlines is the easy part. Those deadlines won’t be met unless there are near-term goals that must be achieved to keep the long-term plan on track.

View Full Article – published by Schroders on 13th August 2020