The recent decision by the US to withdraw from the 2015 Paris Agreement on Climate Change has failed to affect the future of green and socially responsible ETFs (exchange traded funds), results are revealing.
Following US President Donald Trump’s much-criticised announcement that the federal government will be attempting to reverse previously promised climate initiatives, figures have been released which show that for example the VanEck Vectors Green Bond ETF (NYSEArca: GRNB) is up 2.2% over last month, more than doubling the Bloomberg Barclay’s US Aggregate Bond Index’s 1% gain. “Regardless of the future of the Paris Agreement, the green bonds market continues to have significant growth potential,” promised VanEck’s ETF Product Manager William Sokol in a note.
Green funds are still, and will continue to be, a very popular option for investors, especially those concerned with the future, who wish to gain income whilst ensuring the sustainability of our planet, and they are unlikely to be put off by Trump’s decision.
Many other countries have adopted, and remain firm to, policies which favour renewables and sustainable targets and green bonds could be important to finance transitions. Sokol said: “Europe, and more recently China and other emerging markets, have played a much greater role [than the US] in the development of the market in terms of formulating policies that support market growth. Even though the US has ceded its position on the issue of climate change, other countries will likely continue to make progress on renewables, electric vehicles, etc., providing a strong project pipeline for green bonds.”
Regardless of the federal government’s stance, many businesses and politicians in the US have already announced their intention to continue seeking sustainable solutions. In an open letter to the international community and parties to the Paris Agreement U.S. state, local, and business leaders issued a statement to confirm their ongoing support of the move to clean energy:
“We, the undersigned mayors, governors, college and university leaders, businesses, and investors are joining forces for the first time to declare that we will continue to support climate action to meet the Paris Agreement.”
The state of New York aims to boost employment figures through a $1.5 billion plan to invest in renewable energy projects.
American Electric Power, a company that has historically produced more coal electricity than any other U.S. power company, confirm their transition towards clean energy. In a statement, AEP President and CEO Nicholas Akins said "Our investors certainly expect us to really focus on sustainability and de-risk our business, so we continue to focus on that. Secondly, from a customer standpoint, there's an expectation that we move to that cleaner energy economy."
Apple has issued green bonds both in response to investment demand and to push its own environmental stewardship. At ExxonMobil Corp. shareholders approved a resolution forcing the company to report on the impact of climate change. S.C. Johnson & Son announced that its factory in Bay City, Michigan is now powered entirely by local wind power, joining two others—in the Netherlands and Poland—already running on full wind power.
Following the US decision to withdraw from the international agreement, country leaders, such as French President Macron and famous environmentalist campaigners, such as Arnold Schwarzenegger, have released videos which rapidly went viral across the world.