Impact Cords: This Week's Moves (No. 4) February 1, 2025
The first week of Trump's second term brought dramatic changes to America's sustainability landscape, while natural disasters highlighted the mounting costs of climate change. Here's your essential roundup:
Trump's Executive Order Blitz
In his first hours back in office, Trump launched an unprecedented 46 executive actions (surpassing Biden's previous record of 9 first-day orders). On the energy, climate, and social policy front, the orders included:
Climate & International Commitments:
Started the clock on U.S. withdrawal from the Paris climate agreement
Withdrew from the World Health Organization
Rescinded the U.S. International Climate Finance Plan and related funding commitments
Energy & Infrastructure:
Declared a "national energy emergency" to facilitate fossil fuel production
Suspended new offshore wind leasing in federal waters
Ordered review of existing wind projects for "necessity of terminating or amending" them
Specifically targeted the recently approved Lava Ridge wind farm in Idaho
Directed elimination of the electric vehicle "mandate" (though as Axios notes, there isn't actually one)
Paused disbursement of unspent funds from the Inflation Reduction Act and bipartisan infrastructure law for 90 days
Regulatory Changes:
Revoked over 70 Biden-era executive orders related to climate crisis response
Eliminated the group that had set the social cost of carbon at $190 per ton
Disbanded federal offices of chief sustainability officers
Ordered removal of terms like "gender" and "equality" from federal regulations and policies
Social Policy
Placed all federal employees in DEI roles on paid leave
Established that "it is the policy of the United States to recognize two sexes, male and female" on official documents
Ordered dismantling of government diversity, equity and inclusion initiatives within 60 days
Specifically directed the Federal Aviation Administration "to immediately return to non-discriminatory, merit-based hiring"
Revoked decades of executive orders, including the 1965 Equal Employment Opportunity order
Required agencies to identify potential civil compliance investigations of large corporations, nonprofits, and institutions related to DEI practices
Follow the Money Freeze
In a move sending shockwaves through the sustainable finance sector, Trump ordered an immediate pause on disbursements under the Inflation Reduction Act and bipartisan infrastructure law pending a 90-day review. The impact was instant - government agencies scrambled to comply, with one US International Development Finance Corp recruiter urgently requesting job postings be removed due to a sudden hiring freeze (ImpactAlpha).
Wildfires Expose Insurance Industry's Climate Challenge
As Los Angeles reels from fires that have destroyed over 14,000 structures, the insurance industry is confronting the limits of risk modeling. Moody's RMS estimates insured losses could hit $20-30 billion. "When an area has very little or no inherent risk, you don't need a lot of variables," explains Guidewire Software's Tammy Nichols Schwartz. "As the perceived threat gets greater in an area, the accuracy of the models can vary tremendously" (Bloomberg Green).
Court Drama in the Lone Star State
In a ruling that sent tremors through the responsible investing world, a federal judge in Texas found that American Airlines breached its fiduciary duty by allowing BlackRock to vote its retirement plan proxies according to ESG principles. The case centered on the fateful 2021 Engine No. 1 campaign that shook up ExxonMobil's board. But here's the kicker - Exxon's share price has more than doubled since those new directors came aboard. As Andrew Behar of As You Sow noted, the ruling builds on the "'climate cartel' fantasy" being pushed by some politicians.
Wind Power Takes the Hit
Trump's executive order suspending new offshore wind leasing and reviewing existing projects sent renewable energy stocks tumbling. Danish wind giant Ørsted saw shares plunge 15.6% after announcing 12.1 billion kroner in impairments, partially driven by U.S. political headwinds. While RBC Capital Markets analysts note existing construction projects should be safe, the policy shift has created significant uncertainty for the sector's future (The Wall Street Journal).
Europe Pumps the Brakes on ESG Rules
Across the Atlantic, the EU is set to scale back its Corporate Sustainability Reporting Directive under pressure from France and Germany. The original directive would have affected 50,000 companies but may now be limited to firms with over 1,000 employees - potentially reducing scope to just 7,000 companies (Bloomberg).
The Great ESG Exodus Continues
The dominos keep falling as major financial institutions retreat from climate commitments. Following BlackRock's departure from the Net Zero Asset Managers initiative earlier this month, the alliance announced it's suspending all activities to review whether it's "fit for purpose in the new global context." Meanwhile, four of Canada's biggest banks joined Wall Street peers in abandoning the Net-Zero Banking Alliance. As one European asset manager told the Financial Times, many are now "tiptoeing around how to do this right" in the new political environment.
Looking Ahead
This week marked the beginning of a significant shift in America's approach to climate and sustainability policy. While the "ESG" label may be falling from favor, particularly in the U.S., the mounting costs of climate-related disasters suggest these issues won't disappear from investors' radar anytime soon.
About the Cordes Foundation
The Cordes Foundation was founded in 2006 by Ron Cordes and Marty Cordes. Following the sale of Ron’s investment management business, the couple blended Ron’s experience in financial services with Marty’s work on issues that affect women and girls to create a family foundation focused on social entrepreneurship, impact investing and the economic advancement of women. In 2014, when they were joined by their daughter, Steph Stephenson, and son-in-law, Eric Stephenson, the Foundation expanded its strategic focus to include ethical fashion brands, sustainable supply chains and engaging millennials in impact investing. Its mission is to connect social entrepreneurs with the resources they need, convene events to strengthen the ecosystems of impact investing and social entrepreneurship and catalyze 100% of its balance sheet for impact.