Overview of the quarter

It would be easy to argue that Trump 2.0 has triggered the start of a long ESG winter, where sustainability becomes an afterthought rather than a priority for investment managers and companies alike.

Headlines this year tell that story: the withdrawal of the US from the Paris Agreement, fund managers leaving the Net Zero Asset Managers initiative, and outflows from sustainable funds. Meanwhile, Trump has taken aim at DEI initiatives and dismantled environmental regulations to favour the fossil fuel industries.

But, on the frontlines of ESG investing, we see something different. Our spotlight article this quarter asks what is happening to responsible investing in the age of retrenchment.

It makes the case for a reset rather than a reversal, arguing that the principles which anchor responsible investment – resilience, stewardship and long-term value – are not receding but evolving.

While some companies are embracing the political moment and demoting ESG goals, many are moving away from superficial targets and short-term box ticking towards long-term, value-accretive planning that balances financial reality with sustainability. Our dispatch draws on insights from engagements with UK, US and Japanese firms to give an overview of this new world.

We also do a deep dive on three holdings: BP, Newmont and Smurfit Westrock. Top of our priority list was understanding how Newmont and Smurfit were managing recent mergers, and whether a complicated business integration had caused ESG goals to fall by the wayside.

In addition, we shine a spotlight on the marginal abatement cost curve (MACC), which reveals the cost of reducing each unit of emissions alongside the potential volume of reduction, clearly showing which initiatives deliver the greatest impact at the lowest cost.

On BP, where we ask what its strategic reset – which focuses on financial returns and shareholder value over short-term climate targets – means for climate goals and low-carbon assets.