October 15, 2020
A win for Biden in the 2020 U.S. elections could be the best thing to happen to climate change investors this year, according to a Morgan Stanley survey of investors, released Monday.
According to the poll, 51% of investors think the U.S. election will be the “most impactful event” of the year for sustainable investing. An “impact” could be negative or positive, of course, but Morgan Stanley has previously said it considers a second Trump term simply status quo, so a Biden victory is the only outcome that will have an “impact” at all—and it will be largely positive.
In August, Biden unveiled his $2 trillion plan to tackle climate change, targeting a carbon neutral electric grid by 2035, the development of a decarbonized transport sector, and massive investment in new green tech and clean energy.
Besides the obvious environmental impacts of those goals, the switch to clean energy could create new jobs—10 million by the Biden campaign’s estimate, although critics are sceptical of such a high number.
(It’s worth pointing out that the Biden plan is not the Green New Deal advanced by Democrats in 2019, despite President Donald Trump asserting at the first presidential debate that it is.)
Of course, Washington wouldn’t be the only major government tackling climate change next year (in the event of a Biden presidency). In December, the European Commission, which heads the EU, announced its own $2 trillion Green New Deal tying post-pandemic recovery to decarbonized growth. It was the largest green stimulus package ever at the time, earmarking $572 billion for climate action.
Last month China announced an ambitious plan to go carbon neutral by 2060, too. Decarbonizing China—the world’s largest emitter of carbon dioxide—would mean completely eradicating the nation’s coal consumption by 2050. But only 7% of Morgan Stanley’s survey respondents thought Beijing’s pledge would be the “most impactful” event of the year.
That’s understandable. China’s decarbonization drive will likely be fueled more by state-owned enterprises than publicly-listed private companies, creating few investment opportunities.
The EU’s green deal isn’t deemed as significant as a Biden victory, either, with 37% ranking it as the most impactful event of the year. That may be because any action by the U.S., the world’s largest economy and second-largest carbon emitter, overshadows moves by the EU, which is smaller in terms of GDP and emissions.
But investors will likely continue to seek sustainable projects even if there is no Biden victory. The number of sustainable-minded index funds has doubled over the past three years, covering $250 billion. That capital flow might be enough to lobby for greener regulation regardless who’s in the White House.
But it’d be better for change to come from the top.