President-elect Donald Trump is expected to roll back a range of ESG-related regulations in the US once he assumes office in January, targeting policies on corporate disclosures, pension funds, and shareholder proposals, according to Rob Du Boff, senior analyst at Bloomberg Intelligence. Key changes may include halting the Securities and Exchange Commission (SEC) rules for ESG disclosures and curbing Labour Department guidelines that allow pension funds to consider ESG factors.
“The Trump administration appears eager to dismantle these ESG-related policies,” Du Boff stated. The SEC, led by Chair Gary Gensler, has faced significant pressure from Republican lawmakers and corporate groups to reduce its focus on environmental, social, and governance (ESG) initiatives. For instance, the SEC’s climate-disclosure rules were softened this year in response to extensive feedback and legal threats.
These climate disclosure rules remain stalled amid ongoing legal challenges, with Du Boff predicting an “indefinite” pause on implementation. Meanwhile, California’s climate-disclosure regulation remains intact after a judge dismissed concerns of First Amendment violations.
The SEC’s proposed rules on ESG fund labeling are unlikely to advance under Trump’s administration due to the Congressional Review Act, Du Boff said, although he anticipates a Republican-led SEC will still enforce stricter oversight on ESG funds.
Trump’s administration is also expected to reform the shareholder proposal process, a focal point of recent GOP opposition to ESG initiatives. This year, the volume of proposals surged by 47% from 2021 due to more flexible SEC guidelines under the Biden administration. Under Trump’s appointees, the SEC is likely to impose stricter limits on the types of ESG-related proposals allowed for shareholder votes.
The Labour Department’s fiduciary rule permitting pension funds to consider ESG criteria may also be overturned, marking a return to policies implemented during Trump’s first term and later reversed by the Biden administration.
