Climate Assets monthly update: Fighting the US backlash

The traditional Friedman doctrine states that businesses should focus on maximising shareholder returns, while governments set boundaries with laws and regulations. Yet over time the political process has been compromised by campaigning from some powerful corporations reducing its effectiveness. The rapid rise in sustainable investment is partly a response to a growing awareness that the risks of social issues, income inequality, supply chain vulnerabilities and the future of climate change could derail 'business as usual' if politicians aren’t setting adequate boundaries.

However, this trend has faced a pushback of late, particularly in America. Some politicians have criticised sustainable investing, labelling it as 'woke-capitalism,' especially those seeking to attract the vote in states with substantial fossil fuel operations. A sizable rise in the cost of living coincided with massive public spending commitment focused on domestic clean energy (Biden's Inflation Reduction Act) and this fuelled more discontent. Executives previously criticised for greed and disregarding wider issues found themselves baffled by attacks on their moves to warmer stakeholder capitalism.

We believe politicians should stop fostering division and instead demonstrate leadership through implementing the necessary laws and regulations to improve society. Recognising changing times and their responsibility for the world we live in should be of utmost importance and a far more noble cause than seeking political gain. Well managed businesses have demonstrated a strategic focus on sustainable opportunities makes commercial sense and appeals to investors. While we believe governments should be fully encouraging of this, they should certainly not be a hinderance.