With the 2024 U.S. presidential election now upon us, the difference in approach from the two candidates – Kamala Harris and Donald Trump – to sustainability couldn’t be starker.
While Harris has earned some criticism from environmental groups over her commitment to fracking of natural gas – noting in the recent presidential debate that the Biden-Harris administration has overseen “the largest increase in domestic oil production in history” – her policies largely advocate for a robust green energy transition, whereas Trump’s focus remains on accelerating domestic oil and gas production.
Both are being watched by investors closely, albeit for different reasons.
Presidential matters
“Green energy and technology are the key industries to watch if Kamala Harris wins the US presidential election, while defence contractors, oil and gas producers and cryptocurrencies will be front of stage if Donald Trump is victorious,” commented Dan Coatsworth, investment analyst at AJ Bell.
As he noted, Harris “is on a mission to address climate change and environmental challenges in the US and investors might see her winning the election as generating a better backdrop for green companies to thrive.
As AJ Bell put it in a recent briefing note, Harris’s commitment to tackling changing of the climate could prove favourable for green energy and technology sectors. Her policies aim to incentivise investments in renewable energy, electric vehicles, and emerging technologies such as artificial intelligence (AI) and cybersecurity.
In addition, the potential for tax breaks and government backing under her administration is expected to generate momentum for companies aligned with environmental sustainability.
“Exchange-traded fund First Trust Nasdaq Clean Edge Green Energy might be one to watch if Harris becomes US president,” Coatsworth added. “Eighty-eight percent of its assets are held in US-listed green companies ranging from renewable energy operators, semiconductor groups, electric vehicle manufacturers and battery material specialists.”
Energy independence
In contrast, Donald Trump’s return to office is likely to boost oil and gas producers, given his emphasis on domestic energy independence. Former presidential candidate Bernie Sanders has warned that the climate fight would essentially be ‘over’ if Trump gains victory.
“A Trump election victory could also create a tailwind for domestic fossil fuel producers in an effort to fortify America’s energy security,” said Coatsworth.
“Approximately two thirds of exchange-traded fund iShares Oil & Gas Exploration & Production is held in US-listed assets, including a stake in EOG Resources, which is one of America’s key oil and gas players.”
Economic implications
Beyond sustainability, investors are considering the broader economic implications of each candidate’s policies. Harris’s proposal to raise corporate tax from 21% to 28% has sparked concern over its potential to lower corporate earnings and dampen stock market performance.
Trump, on the other hand, is pushing for tax cuts, including lowering corporate taxes to 15%, which may appeal to business leaders but could exacerbate inflation through proposed tariffs on imported goods.
“Kamala Harris currently has the lead over Donald Trump in the polls yet the opposite stands in the betting market,” Coatsworth added. “This divergence is confusing to investors and many won’t have confidence in how to position portfolios for the new presidential term.
“That situation, combined with a lack of detailed policy information in many areas, makes this a guessing game for markets and that’s a dangerous situation to be in. It could lead to heightened market volatility and swings in share prices as we enter the final three weeks of the election campaign.” Read more here.
Read more: What effect would a second Trump administration have on U.S. environmental policy?
