Stockholm (NordSIP) – Last week, sustainable investors and climate specialists flocked to the USA on the occasion of New York Climate Week (NYCW). The gathering was marked by a range of events, speeches and discussions from decision makers, specialists and influencers. Prominent attendees included Ursula von der Leyen, the European Commission President; Gaston Browne, the Prime Minister of Antigua and Barbuda, Ministers from Denmark, Indonesia, Australia, Vanatu, Japan, and the UK, and actors and activists Mark Ruffalo and Jane Fonda.
The Nordics marked their presence. Both the Danish and the Finnish Consulates General in New York organised events to showcase Nordic leadership in the fight to mitigate and adapt to climate change.
To get a better sense of the week, NordSIP reached out to several Nordic bankers and investors to hear their perspectives. Although it seems the divergence between Europe and the USA on climate change is becoming increasingly clear, there is still a strong financial interest in climate change. The feedback was hopeful that state-level initiatives will continue to pursue the climate agenda in response to realities on the ground.
A More Grounded Take on Sustainability?
One of the themes that seems to emerge from NYCW is the sense that the ongoing ESG pushback has focused minds on climate. Besides climate, it appears that much of the pushback was on the social aspect of ESG.
“The US ‘ESG reset’ leaves clean energy a priority, but social issues have lost focus. I’m only now realising how much the ‘S’ has shaped the narrative in the US. Banks are using fewer sustainability criteria in their credit decisions. However, physical climate risks are seen as a financially material factor, whereas transition risks are not,” says Samu Slotte, Managing Director, Head of Sustainable Finance at Danske Bank.
“NY Climate Week was energising. There were more events, more participants, and more momentum than ever before. What stood out was that, despite the political pushback against ESG in some markets, the interest in climate action hasn’t diminished. If anything, it’s deepened. The conversations felt more grounded, shifting away from abstract targets and toward practical, systems-level solutions,” says Emily Norling, Impact Director at Summa Equity.
States Pick Up Federal Climate Slack
As Donald Trump returned to the White House, many of the green initiatives started by the Biden Administration, such as the provisions included in the Inflation Reduction Act, were abandoned. However, interest has not faded and it seems that US states are picking up the tab.
“Despite political headwinds, the market shows clear signs that the green transition in some areas is in full swing and cannot be stopped, not even in the US. 75% of decisions about the American green transition are made locally in the states and not at the federal level. For example, Texas is the leading state in the expansion of wind and solar energy. And there are a lot of jobs associated with this development. Therefore, it is important to remember the nuances of the debate and not listen to the same people but look more at what is actually happening,” Danish pension company Velliv notes.
“Despite loud opposition from the White House on renewables, state and local policies continue to advance cheap renewable energy. Solar and onshore wind with batteries are the fastest, often cheapest to meet the rising energy demand from growing datacentre needs and to meet energy transition goals of certain USA states,” Slotte adds.
Investors Have Not Abandoned Climate Finance
State-level authorities are not the only ray of light in what has become a hotly polarised political issue at the federal level. The feedback from NYCW suggests that the fundamental issues caused by climate change represent a material enough economic risk to keep investors interested in climate change mitigation and adaptation.
“Like in previous years, BlackRock participated at events during NY Climate Week to meet with clients, peers, entrepreneurs, and other thought leaders who are interested in sustainability and the energy transition. BlackRock experts hosted nearly 300 interested clients, sharing insights on geopolitics, the evolving energy transition, climate adaptation and resilience, the role of infrastructure and private markets, and more,” Charlotte Månsson, Head of Sustainable & Transition Solutions, BlackRock, Nordic region tells NordSIP.
“My BlackRock colleagues and I spoke at more than 10 industry roundtables and engaged clients at more than 80 events. As in previous years, these were great opportunities to listen to our clients and help them navigate the transition to a low-carbon economy, bringing together research, analytics, and investment solutions to empower clients’ choices and support them in meeting their investment goals,” Månsson adds.
However, climate change was not the only sustainable topic captivating audiences. Despite the strength of anti-Diversity, Equity and Inclusion (DEI) in the USA, there is still some interest in gender equality. “One of the highlights for us was co-hosting the ‘Women in Climate & Impact’ event with Calvert Impact at Pebble Bar in Rockefeller Center. It brought together an inspiring group of leaders and changemakers for meaningful conversations and new connections,” Norling adds.
Navigating a Stormier Transition
Looking ahead to the future, the focus seems to be on how to navigate the energy transition in light of the new political and market conditions. The feedback from NYCW was hopeful for the future.
“In the coming year, we will continue to serve our clients as a fiduciary by providing choice, seek the best risk-adjusted returns within the mandates clients give us, and underpin our work with research, data, and analytics. Many of our Nordic clients are looking to understand how to navigate investment opportunities and risks related to the energy transition. To serve our clients, we have built an industry/leading sustainable and transition investing platform, which has grown 850 percent to over $1 trillion in assets over the last five years and includes over 500 sustainable and transition investment strategies globally. We are proud that clients are choosing BlackRock as their partner to navigate the energy transition,” Månsson explains.
“Despite the noise, I left NY Climate Week with a positive impression of strong momentum for renewables in the US and perhaps a welcomed reset in the overall sustainable finance/investment narrative,” Slotte says.
“However, we also see that the market conditions for green investments are changing due to the political landscape and the ‘goodwill’ that companies could previously expect from the outside world by contributing to the green transition has become more ambiguous. There is a slowdown in demand in general, but this provides, among other things, a more focused approach to value creation. Finally, we are at a point where the solution lies in looking holistically at investments and where markets drive development. Where environmental, social and financial value should be fully integrated into all investments, not just green ones,” Velliv concludes.
