Impact portfolio managers across the pond are closely watching U.S. election

November 05, 2024 at 11:10 AM EST

While domestic market narratives are almost solely focused on the hotly contested U.S. election, the view from abroad is one of trepidation. This is particularly true of portfolio managers in London. In 2024, the city was ranked as the second largest global financial center for impact investments by the Global Green Finance Index.

Among U.K.-based impact fund managers’ concerns about a roll back of environmental policies adopted by the Biden administration — including the Inflation Reduction Act – is chief among concerns.

Felix Amoako-Kwarteng of Baillie Gifford wrote last week that “while a repeal might not halt the U.S. energy transition, it will create policy uncertainty and divert capital from green energy projects.” According to Amoako-Kwarteng, the result would be the U.S. falling behind Europe and other developed economies in achieving climate goals.

Baillie Gifford joins other major asset managers in identifying offshore wind and electric vehicles as the segments of clean energy investment most vulnerable in a scenario where the Republican party controls U.S. policy.

Monica Defend and Vincent Mortier of Amundi walked through possible U.S. election outcomes for their investors in a report released during the final week of October. The key risk to markets they laid out was a Trump administration implementing tariffs through executive order regardless of which party controls congress.

According to their analysis, a full implementation of tariffs could wipe out the growth gain from tax reductions, shaving a cumulated 1.7% of GDP over ten years.

Many analysts have concluded that a lower growth scenario could derail public renewable energy investment.

Meanwhile, impact investors would welcome a victory for Vice President Kamala Harris, with the caveat that her administration may not be able to achieve all goals.

Lizzy Galbraith and James McCann of abrdn wrote in a note Tuesday that “while Harris has set out a more fiscally expansive and regulatory-heavy policy platform than Joe Biden, the likelihood she will be able to implement it in full is slim.” In their view, if Harris wins she is most likely to be working with a divided Congress.

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Impact portfolio managers across the pond are closely watching U.S. election

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