We believe that after the dust has settled, more people will understand that the work of sustainable investing is vitally important. More people will bring their commitment, their energy, and their assets to join this movement.
In many important ways, the 2016 election cycle has echoed the extended legacy of the financial crisis and subsequent Great Recession. The November 8 election sharply highlighted the deep divides in America, which the 2007-2009 financial crisis exacerbated. These divides, including those between coastal urban centers and interior, small town America, between college-educated Americans and voters without a college degree, and between white and non-white voters, all pivot on widespread economic anxiety. The gains from the sluggish overall level of economic growth since the financial crisis were very unevenly distributed – Wall Street benefited at the expense of Main Street; technology industry and biotechnology industry workers benefited relative to traditional industrial workers; and female employment recovered faster than male employment. Trump built his campaign on the economic anxiety of rural, small-town, rust-belt and Southern blue-collar workers. Trump’s message was promoted through his deeply offensive remarks and behavior toward Mexicans, Latinos, women, Muslims, and blacks. Nonetheless it resonated with a core of voters, significantly under counted by pollsters, who ultimately backed a call for disruptive change. There is no doubt the economic pain is real, and Trump’s nativist and protectionist stance was better able to assemble a winning coalition of voters than Clinton’s “stronger together” message.
Fundamentally, the income inequality called out by Trump is an issue that SRI investors have been engaged in fighting for some time.
At Trillium, we agree that income and wealth inequality are huge and important issues. We agree that the utter stagnation in median family incomes for the past two decades must be addressed. We recognize that accessing health care and finding a way to pay for health care costs in the U.S. creates significant stress for many Americans.
But we have a different vision for solutions. We believe that repairing, rather than abolishing, the Affordable Care Act will help solve America’s health care problems. We believe creating opportunities for education and empowerment will bolster the position of the average family, and will do it more effectively than cutting taxes on high income earners. We think that inclusion and promoting diversity will help encourage the dynamism to foster growth, rather than setting different groups of Americans against each other. We do not agree that putting America behind a protectionist trade barrier will improve our economic welfare.
At this point, the policies that the Trump administration will follow are largely unknown, and we will not have much insight into them until we see the advisers and Cabinet members he chooses. We will not know the ultimate impact of this election on the financial markets for some time. If a Trump administration is able to move some fiscal stimulus through congress, there may be a slightly expansionary effect on the economy. But for now we think there are more questions than answers and we have not changed our recommended allocation to either stocks or bonds.
With the election of Donald Trump, our work becomes more important than ever. In the face of weakening or dismantling of agencies such as the Environmental Protection Agency, we will need to further strengthen our multi-pronged interactions with investors, communities, corporations, and policy-makers to address the world’s pressing social and environmental problems. One could make the case that this should accelerate interest in sustainable and responsible investing. Change is difficult, but through shareholder advocacy, community investing, and policy engagement, we have made progress on the environment, labor conditions, income inequality, diversity, and governance through a variety of political administrations and economic phases since our founding in 1982, and we will continue to do so in the years to come.