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Potential Effects on Impact Investing Under the Biden Administration

Sikich

Dec 22 2020

3 min read

Environmental and sustainable investing has gained a lot of traction over the last 10 years, from wind power to water stocks, solar energy and more. As a result, more and more sustainable investment options are available for investors looking to make a positive impact with their assets. Many investors and financial professionals speculate that, under a Biden administration, this type of investing will only grow. If you’re interested in environmental investing, now might be the ideal time for you to start.

Plans for a Green Economy

President-elect Joe Biden has announced a $2 trillion plan to deploy resources during his first term to take significant steps toward climate progress, according to his website. This is expected to benefit many areas such as solar and wind technologies, geothermal production, bioenergy production, energy storage, green transportation, green building and more. His plan includes, but is not limited to:

Having electricity production be carbon-free by 2035
Upgrading public transportation by providing high-quality, zero-emissions public transportation options
Investment in electric vehicle charging
Reduce the premium of electric vehicles over gas-powered cars
Implement cost reductions in innovative clean energy technologies

Green Technology and the Future of Investing

Federally funded research from a number of agencies including the Departments of Defense and Energy, NASA, the National Oceanic and Atmospheric Administration and the Environmental Protection Agency could be an economic driver for innovation over the next four years. In the past, for example, research led to innovative technology inventions such as the internet, GPS and smartphones. Investors are speculating that we may see new federal investments in science and technology that could rival the leaps we’ve had in the past.

Rejoining the Paris Climate Accord is predicted to further development in the U.S.’s clean energy industry. If tariffs on solar parts made in China and Mexico are lifted, the solar energy industry could also thrive. As isolationism is lifted, free trade can increase opportunities in emerging markets for U.S. companies.

Investments in sustainable investing in the U.S. has grown sharply, jumping to $17.1 trillion at the beginning of 2020, up from $12 trillion two years ago. This represents about a third of investment assets under management in the U.S. If the incoming administration is successful with these green initiatives, it is thought this trend will continue.

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References

Nextbillion.net, “Reversal of Fortune: Five Ways Biden’s Win Will Boost Impact Investing in Emerging Markets,” 11/17/2020.

Penta, Barrons.com, “How a Biden Administration Will Boost ESG and Impact Investing,” 9/9/2020.

Barrons, “The Biden Era Could Be a Boon to Sustainable Investing,” 11/23/20.

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About the Author

Sikich

Sikich is a global company specializing in technology-enabled professional services. With more than 1,900 employees, Sikich draws on a diverse portfolio of technology solutions to deliver transformative digital strategies and is comprised of one of the largest CPA firms in the United States. From corporations and not-for-profits to state and local governments and federal agencies, Sikich clients utilize a broad spectrum of services* and products to help them improve performance and achieve long-term, strategic goals. *Securities offered through Sikich Corporate Finance LLC, member FINRA/SIPC. Investment advisory services offered through Sikich Financial, an SEC Registered Investment Advisor. 