A Silent Green Seen Emerging on Climate and Energy Transition As New Administration Heads to White House

Silent green may become the guiding catchphrase under the Trump administration.

The upcoming changing of the guard in Washington in January has prompted lots of educated guesses on what shifts may take place with Donald Trump as president for the green economy and energy transition.

Several factors are at play.

On the energy front are several of President-elect Trump’s choice in his new administration, who lean more toward fossil fuels than toward renewables and do not see climate change as a top priority.

On the regulation front is the SEC, which will be under close watch by climate advocates amid predictions for more restrictive policies for ESG-related initiatives.

For starters, it’s probably a safe bet that the SEC’s pending climate risk disclosures, which would require companies to report details on climate-related activities, will  not become mandatory requirements.

Even so, US companies will still need to follow reporting requirements for Europe and California, but a broader measure is not likely. The EU, as no surprise, has and will likely continue to mandate strict regulations impacting US multinationals. However, in recent months, there have been indications from EU regulators to revisit some of the overtly onerous reporting regulations.

In addition, experts say, the Trump administration is expected to weaken ESG-related policies, including restricting shareholders from filing ESG-related proposals and revising a 2022 rule that allows retirement fund managers to consider ESG risks.

So what does this all mean?

Climate investing comes in many forms, from energy and energy companies to climate funds that invest in proven businesses providing decarbonization and energy efficiency-focused products and services.

The LP community will continue to look for opportunity in climate, turning its attention more and more to the energy-transition sector. There is unabated momentum in the infrastructure and energy transition buildup.

“Energy transition remains one of the buoyant corners of the private markets, even in a tough fundraising environment. Although policy uncertainties are weighing on capital deployment and it will be a while before clarity emerges on how various policy measures – from tax credits to tariffs – play out and their precise impact on project economics,” said Sharadiya Dasgupta, founder of Blue Dot Capital, a sustainable finance and private markets consultancy.

From a communications standpoint, the activity will be focused on how investments in climate add value or help reduce costs, a more silent targeted approach that is less reliant on media relations and more reliant on direct conversations with investors/limited partners. Other expected activity will include more communications from private markets platforms focused on regularly sharing their outlooks on infrastructure, energy transition, and digitalization.

With regulatory requirements to decarbonize likely low in the coming months and years ahead, some climate businesses will face demand and price headwinds no doubt but will still be an important alternative in the private markets, searching beyond the silent green.

Mark Kollar
Partner, Prosek Partners

Mark Kollar’s monthly Letter from America can be read at The Alternative Investor.