More than a quarter of Americans questioned in a CBS News poll last year considered climate change a “crisis”, with a further 36% defining it as a “serious problem”. Another poll carried out this year revealed that almost two-thirds of Americans support policies prioritizing the environment and climate change, a record high. However, climate change ranked 13 out of 18 issues most important to voters in the election.
Yet, when it comes to addressing the climate emergency and the broader ESG agenda in the United States, significantly different assessments and pathways are being taken by the Republican and Democratic parties.
On the one hand, the Democrats are espousing an ambitious green agenda while on the other President Trump has been scaling back or revoking many aspects of Obama’s environmental agenda. These include the decision to leave the Paris climate agreement in June 2017, repealing the Clean Power Plan in October 2017 and diminishing the role of the Environmental Protection Agency, where criminal enforcement is now at a 30 year low.
From a broader Environmental, Social and Governance (ESG) perspective, in April 2018 the Department of Labor pared down the role of ESG considerations in fiduciary investing that had been initially outlined in a 2015 ERISA ruling.
The original phrasing was that ESG issues were “proper components of the fiduciary’s analysis of the economic and financial merits of competing investment choices”. However, this was subsequently changed to “plan fiduciaries are not permitted to sacrifice investment return or take on additional investment risk as a means of using plan investments to promote collateral social policy goals.
In June 2020, the Department of Labor has reinforced this view that ESG may conflict with fiduciary duty. The SEC’s decision to amend shareholder rights will also raise additional hurdles for investors to raise ESG issues with companies.
Yet, whoever wins this year’s Presidential election will still face the economic and financial impacts of extreme weather events. According to the National Oceanic and Atmospheric Administration (NOAA), between 1980 and 2019, 263 weather and climate disasters have hit the United States with a cumulative loss of US$1.77 trillion:
In comparison, financial losses in the EU-28 caused by weather and climate-related extremes between 1980 and 2017 (latest data) was estimated at approximately US$480 billion.
Looking into the future, the total annual price tag for hurricane and other coastal storms on US property and infrastructure is expected to reach USD 35 billion, and by 2050 up to USD 106 billion worth of existing US coastal property will likely be under sea level nationwide with some homes and commercial property with 30-year mortgages literally under water before maturity.
Extreme heat is also expected to become more pervasive with the average American experiencing up to 50 days of over 35°C each year by 2050, or three times the number of extreme heat days witnessed over the past 30 years This may lead to an increased incidence of death through heat-related mortality and worsening air quality. In addition, rising temperatures may reduce labor productivity, impact agricultural yields and place significant strains on energy systems across the country.
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