The rise of Donald Trump to power in the United States brought various changes in the government's approach to environmental issues, social and governance (ESG). Since the beginning of his administration, there was a clear weakening of environmental regulations, a less stringent stance on social issues and an emphasis on market deregulation
However, even in the face of this adverse political scenario, the concept of ESG has maintained its relevance and may continue to grow, driven by the financial market, institutional investors and consumers
The Trump administration promoted a series of measures that weaken ESG regulations, mainly in the environmental field. Among the main actions, stand out:
a)The United States' exit from the Paris Agreement, weakening global climate commitments
bThe relaxation of regulations by the Environmental Protection Agency (EPA), reducing restrictions on industrial emissions and natural resource exploitation
cThe revocation of rules that required companies to be transparent about socio-environmental impacts
These actions signal a retreat in the ESG agenda from a governmental perspective. However, paradoxically, this movement can generate a stronger response from the private sector and international markets, that tend to reinforce their own ESG guidelines
The European Union (EU) has been one of the most active regions in creating rules to ensure that companies operate in a sustainable and responsible manner. One of the main regulatory milestones is the Corporate Sustainability Reporting Directive (CSRD – Corporate Sustainability Reporting Directive, that requires companies to disclose detailed information about their ESG practices
Furthermore, there are other important standards
a)EU Taxonomy – Define criteria to classify sustainable economic activities
bSustainable Finance Disclosure Regulation (SFDR – Regulamento de Divulgação de Finanças Sustentáveis – Forces investors and financial institutions to report the ESG impact of their investments
cDue Diligence Law in Corporate Sustainability – Requires companies operating in the EU to conduct audits to ensure that their supply chains comply with environmental and human rights standards
Despite the regulatory dismantling promoted by the federal government, companies and investors realized that ignoring ESG could generate financial and reputational risks. Large investment funds have begun to demand greater ESG transparency, considering that environmental factors, social and governance factors directly impact long-term profitability
Besides the investors, consumers themselves play a crucial role in maintaining the relevance of ESG during the Trump era. The new generations also show their preference for ESG in the workplace. Millennials and Generation Z choose jobs not only for the salary, but for the alignment of the company with its values
The new generations make consumption choices based on values and socio-environmental impacts. According to a study by Bain & Company, management consulting firm, more than 70% of millennials are willing to pay more for sustainable products. Generation Z follows the same trend, being even more demanding with brands that demonstrate a real commitment to ESG. That is to say, prefer to consume from brands aligned with sustainable and socially responsible principles. This factor may encourage companies to maintain ESG strategies, regardless of the government's stance
Since the beginning of the Trump administration, there have been a series of actions aimed at dismantling or reducing the effectiveness of diversity and inclusion programs in the public sector. The Trump administration took a critical stance towards various initiatives aimed at promoting racial diversity, ethnic and gender at the federal level, many of which had been strengthened in previous administrations
The objective of many of these actions was, as defended by its supporters, eliminate what they called "racial preference" or "reverse discrimination". However, these actions generate significant controversies, with diversity advocates arguing that the government is rolling back the progress made over the years
The dismantling of diversity and inclusion programs faces resistance within the federal government itself. Various agencies, like the Department of Defense, they continued to conduct training on diversity independently, and some public leaders protested against Trump's orders, defending the importance of a diverse and inclusive workforce for the government and federal agencies
Furthermore, some civil society organizations and human rights defenders have legally challenged several of these actions, arguing that they violated constitutional rights and laws that promote equal opportunities. Meanwhile, with the support of conservative political figures, the changes implemented by Trump had a significant impact on the reduction of resources and the adoption of more inclusive policies in the public sector
Even with a government that seeks to weaken ESG programs, the concept remains relevant, driven by investors, consumers and international regulations
The Trump era shows that, although government decisions may affect the speed of ESG adoption, the global market and society continue to demand transparency, sustainability and social responsibility. Companies that ignore this trend may face reputational and financial risks, while those that maintain an ESG commitment can strengthen themselves in the global landscape
