Trump storm batters wind and solar stocks

The summer Sunday newsroom shift is typically a stultifying affair. But not this week, as I was scrambled with my FT colleagues to cover the assassination attempt on Donald Trump.

One of the undercurrents from the shooting that I wrote about was an attack on diversity, equity and inclusion (DEI). Far-right Republicans quickly connected the Secret Service’s recent DEI efforts with a breakdown in protection. The right’s DEI attack had been mounting, and now it is likely to accelerate — with consequences for corporate boardrooms around the world.

For today, I have a piece on the stock market consequences for wind and solar companies as the likelihood of Trump’s win in November increases, according to recent polling. And Simon looks at the preparations for the finance-focused COP29 summit, which will start a few days after the US election.

Finally, I want to highlight Simon’s role in the new FT film: Who killed the ESG party? (I’m innocent, I swear!) — Patrick Temple-West

We’re teaming up with the FT’s Behind the Money podcast for a special episode in which we’ll answer your questions about what “responsible” business and finance really looks like in the 21st century. You can submit a question via voice message here, or email michela.tindera@ft.com.  

renewable energy stocks

Market is ‘overestimating’ Trump’s potential impact on offshore wind, analysts say

The shocking assassination attempt on Donald Trump over the weekend also jolted financial markets this week. As political analysts and the betting market predicted the attack would boost Trump’s odds of returning to the White House, a number of Wall Street tickers with ESG implications proved sensitive to the ex-president’s rising stock.

On Monday morning about a dozen wind and solar companies quickly sold off by as much as 10 per cent. Shares in gun companies such as Smith & Wesson jumped higher, with a second Trump administration — despite his nearly becoming a shooting victim — expected to resist calls for tighter gun controls. Bitcoin, which has found favour with laissez-faire Republicans, also surged.

Analysts, however, have urged caution in reading too much into the renewable energy sell-off, with some saying it was an overreaction to the attempt on Trump’s life.

For example, Danish offshore wind company Ørsted traded down 6 per cent on Monday, a reaction to Trump’s anti-offshore wind stance. Earlier this year, Trump promised to halt all offshore wind projects on his first day back in the Oval Office. In Trump’s first term, wind companies waiting for government approval faced significant delays.

But the market “is overestimating” the consequences of Trump on offshore wind, Morningstar wrote on Monday. Ørsted has two projects in construction that have already received the green light from the government — insulating them from potential Trump interference, the company said. And if future projects are halted, Ørsted could withdraw from bidding with little financial consequence. Its share price remained down 1 per cent on Tuesday.

Tax credits for wind and solar businesses also look insulated from Trump, Morgan Stanley said on Tuesday.

Both Republicans and Democrats have previously voted to renew wind and solar tax credits, suggesting “there is a low risk of repeal” even if Republicans sweep both houses of Congress, the bank said.

Republican-controlled areas of the US have won the bulk of federal clean technology project investments, the FT reported last year.

“We think the need for renewable power will continue to grow,” Morgan Stanley said, citing Microsoft’s $10bn in renewable electricity deal with Brookfield announced in May.

Renewable energy stocks rallied on Tuesday as part of a broad stock market gain. But trades in recent days underscore how politicised renewable energy stocks have become — and their sensitivity to the possibility of a second Trump term. (Patrick Temple-West)

COP29

Finance-focused UN climate summit seeks to draw in private sector

When Azerbaijan was announced as the host of this year’s COP29 climate summit, the global response was dubious.

The news came towards the end of last December’s COP28 conference in Dubai, which was marked by intense scrutiny of the Emirati hosts’ alleged conflicts of interest, given their heavy reliance on oil and gas revenue. Azerbaijan, which generates 90 per cent of its export revenue from hydrocarbons, will be the second consecutive “petrostate” to host the UN’s annual climate summit.

But COP29 “climate champion” Nigar Arpadarai, who has the role of engaging businesses and other non-state actors around the event, insists Azerbaijan’s hefty oil and gas income will not stop it from making the conference a success. “This oil shaming is not healthy,” she told me when we met in London. “Really, it’s absolutely meaningless.”

Azerbaijan made an early blunder when it announced a 24-member organising committee consisting entirely of men, before adding 12 women in the wake of international criticism.

More recently it has promised to inject $500mn into a climate investment fund, and has also floated the idea of imposing a new international tax on oil and gas profits to fund climate investments.

Arpadarai presented this year’s conference as a “finance COP”, with the potential to unlock capital that will fund the goals agreed in Dubai last December, which included a tripling of renewable energy capacity by 2030.

There will be heavy focus on new promises by wealthy countries of financial support for green investment in developing ones.

Arpadarai argued that if this investment push is to succeed, business will need to be closely involved — including small- and medium-sized enterprises, whose voices have often been drowned out at previous climate conferences by those of larger corporations.

She promised a focus on helping SMEs to handle new climate-related regulations and reporting requirements, with which some have been struggling, as well as on supporting the growth of innovative green start-ups.

“Within the green transition, SMEs should flourish — not only survive, but flourish and shape the transition,” she said. (Simon Mundy)

Smart read

Global action on climate change needs to be executed carefully to avoid stoking conflict, writes Andrew Gilmour of the Berghof Foundation.