President Joe Biden has made no secret of his desire to support policies that will protect American-made clean energy and invest in innovation – and his Administration has begun to take bold steps in that direction.
Look no further than the American Jobs Plan unveiled last month to improve the nation’s infrastructure and economy. The plan contains several programs to promote American technical innovation including electric vehicles (EV) and encourage more ESG investing.
The EV push has received the lion’s share of media attention. The plan directs $174 billion in EV investments, including grants and incentives for public and private entities to build a network of 500,000 charging stations by 2030.
That $174 billion is the largest single outlay for transportation projects under the infrastructure plan, but it’s not the only one that targets reduced greenhouse gases. Another $85 billion will go toward public transit.
National Public Radio noted that the Biden plan also proposes $100 billion in programs that would modernize the electric grid – including building more transmission lines from wind and solar plants to large cities. In addition, the plan would create a “Clean Electricity Standard,” under which a certain percentage of U.S. electricity would have to be generated by zero-carbon energy sources.
Other highlights include:
- $46 billion for government agencies to buy fleets of electric vehicles
- $35 billion for research and development programs for new technologies
- $16 billion to help fossil fuel workers transition to new jobs in the green economy
Less attention has been paid to how the Biden plan might encourage more ESG investing, but it could have a long-lasting impact in this arena. As CNBC reported, some financial advisors say the plan’s measures to further sustainability and promote a cleaner environment might provide a tailwind for investors in ESG and sustainable funds.
Such funds were already gaining more popularity even before the massive infrastructure plan was unveiled. Data from Morningstar show that ESG funds captured $51.1 billion of net new money from investors last year, setting a fifth straight annual record. Three out of four sustainable funds ranked in the top half of their investment categories over the past three years.
“Biden’s influence here is going to be helpful,” Mark Mathers, a certified financial planner, and partner at Beacon Pointe Advisors in Boston told CNBC.
Investors who want to put money into ESG funds should look for funds with a track record of at least three years, and that is run by managers who put a clear emphasis on sustainable investing.
A good place to start would be with one of these firms:
- Impax Asset Management: This is the North American division of Impax Asset Management Group PLC and the adviser to Pax World Funds, which offered the first sustainable mutual fund in the U.S. in 1971. Impax’s funds are designed to integrate ESG research and analysis into the overall investment process to better manage risk and deliver competitive returns.
- Parnassus Investments: Founded in 1984, Parnassus bills itself as the largest pure-play ESG mutual fund company in America. Its strategy is to own large quantities of company stock, which allows investor voices to be heard by some of the world’s biggest corporations.
- Boston Common Asset Management: Founded in 2003, Boston Common has become a leader in global impact initiatives devoted to both social change and financial returns. The company is women-led and majority employee-owned, and serves endowments, foundations, mission-driven organizations, religious groups, family groups, and pension funds across the U.S.