As Americans prepare to head for the polls next Tuesday, the result of a hotly-contested presidential race hangs in the balance. However, there is a 65% chance that the next US president will be Democratic candidate Joe Biden.

The implications of a Biden victory for markets, the economy, the country’s handling of the pandemic, and international relations have been much discussed elsewhere. But as ESG (environmental, social and governance) investors, we’ve focused specifically on the implications for the “E” and “S” of our favourite acronym.

We found that they could be profound.

A sweeping Democrat victory in November would result in a step-change in US climate policy. Biden would re-commit the country to the Paris Agreement and to a net zero emissions reduction target by 2050.

This would mean significant investment ($2 trillion) into green industries and technologies, and it would also require tighter regulation of higher-emitting industries, including oil and gas, utilities and autos.

Beyond the climate agenda, a Biden victory could have significant implications for consumer, healthcare and tech companies as Biden seeks to strengthen labour protection, improve access and affordability in healthcare and regulate big tech.

Regardless of the election outcome, we expect an increased focus on on-shoring production and jobs to the US to benefit domestic companies and suppliers. This will have negative implications for international suppliers with high exposure to the US.

Our full research is available as a PDF below.

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