Sustainable Investors Have an Important Role to Play

By: David Cantor

In recent years, sustainable investing has been caught in the crosshairs of a political backlash.

In May of 2025, the Trump administration moved to rescind Biden-era rules that allowed retirement plans such as 401(k)s and 403(b)s to consider environmental, social, and governance factors in investment decisions.¹ Fossil fuel energy states including Texas, Oklahoma, West Virgina, and Montana have passed laws targeting investment firms that are perceived as boycotting the energy industry.² Republican attorneys general and federal officials have scrutinized investor coalitions that raise environmental issues at annual shareholder meetings for violations of antitrust laws.^{3 4}

Despite such political support, many regions are seeing a growing trend towards generating power from renewable sources like wind, solar and geothermal.⁵ Resistance to this transition away from fossil fuels should come as no surprise. The economic interests at stake are enormous. In the US alone, the oil and gas industry accounts for roughly 8% of GDP and employs over ten million people.⁶ Moreover, the consequences of this trend could be as profound and unpredictable as those of the industrial revolution– which marked the last great shift in global energy sources.

Between 1760 and 1914, the developed world’s economy shifted from human and animal labor to fossil fuels and electricity as sources of energy.⁸ That mechanization of agriculture, manufacturing and transport took time and came at great cost.⁹

As steam and combustion engines replaced raw muscle, wealth shifted, monarchies fell, and economies transformed.¹⁰ Entrenched interests whose power depended on old economic structures did not give up without a fight. The US was no exception: the Civil War, fought over the issue of human slavery, remains the most lethal conflict in US history with more American deaths than the First and Second World Wars, Korea, and Vietnam combined.¹¹

In our own era, the oil and gas industry–one of the most influential in the world –will undoubtedly continue efforts to advocate for its interests.¹² States whose economies and employment are tied to fossil fuel extraction can also be expected to use available legal tactics to thwart the transition to renewable energy sources.

But just as the shift from agrarian to industrial economies was unavoidable, I believe the adoption of renewable energy sources will continue to expand over time.¹³ In some regions, wind, solar, and geothermal have become cheaper than fossil fuel sources, and advances in renewable technology continue to lower the cost of battery storage and electricity generation. ^{14 15 16 17}

At the same time, the environmental, economic, and social costs of climate change are coming into focus. While estimates vary, a growing body of studies suggest that damage caused by carbon emissions will have long-term effects on human well being.^{18 19 20 21 22} When these inputs are factored into the equation, the cost benefits of renewable energy seem even more compelling.^{23 24}

In a free market economy, investment tends to flow toward the most efficient forms of production.²⁶ This shift is already underway in some areas. In 2025, global renewable electricity generation surpassed coal for the first time, driven largely by growth in solar power and advances in battery technology.²⁷ Last year, investment in renewable energy development was double that of fossil fuel projects.²⁸

The industrial revolution, in combination with a range of social reform movements, led to global improvements in income and life expectancy, but its negative impact on the environment has been profound.^{25 26} The renewable energy transition offers the potential for tapping into inexhaustible natural sources of energy. It overlaps with advances in computer science, robotics, and biotech that together could transform life as we know it.²⁷And it promises to do so while mitigating the environmental damage caused by fossil fuels.²⁸

Despite the resistance of the fossil fuel industry and its political lobby, the “green revolution” is underway.²⁹

I believe that as investors we can play a crucial role in this transition.

 

The views expressed in this article are the author’s opinions and are provided for informational and educational purposes only. This material is not intended as investment, legal, or tax advice, and should not be relied upon as a recommendation to buy or sell any security or investment strategy. References to economic trends, energy markets, or future developments are based on current opinions and assumptions that are subject to change. Past trends and historical developments are not guarantees of future results. 

 

Sources:

1. https://www.ropesgray.com/en/insights/alerts/2025/05/trump-dol-withdraws-biden-era-esg-rule-and-crypto-guidance-for-erisa-plans

2. https://comptroller.texas.gov/economy/fiscal-notes/archive/2023/may/fossil-fuels/  

3. https://ago.mo.gov/attorney-general-bailey-leads-fight-against-hidden-esg-and-dei-agendas-in-corporate-america/ 
5. https://ago.mo.gov/attorney-general-bailey-leads-fight-against-hidden-esg-and-dei-agendas-in-corporate-america/  
6. https://www.wri.org/insights/clean-energy-progress-united-states 
7. https://www.investopedia.com/ask/answers/030915/what-percentage-global-economy-comprised-oil-gas-drilling-sector.asp 
8. https://en.wikipedia.org/wiki/Industrial_Revolution  
9. https://en.wikipedia.org/wiki/Industrial_Revolution 
10. https://oercommons.org/courseware/lesson/87933/overview#:~:text=Industrialization%20and%20Urbanization,developed%20new%20ways%20of%20living. 
11. https://www.nps.gov/civilwar/index.htm 
12. https://en.wikipedia.org/wiki/Fossil_fuels_lobby 
13. https://siepr.stanford.edu/publications/working-paper/was-industrial-revolution-inevitable-economic-growth-over-very-long-run#:~:text=This%20paper%20studies%20a%20growth,the%20level%20of%20the%20population. 
14. https://www.reuters.com/business/energy/around-90-renewables-cheaper-than-fossil-fuels-worldwide-irena-says-2025-07-22/ 
15. https://www.scientificamerican.com/article/wind-and-solar-energy-are-cheaper-than-electricity-from-fossil-fuel-plants/ 

16. https://www.un.org/en/climatechange/raising-ambition/renewable-energy

17. https://climate.mit.edu/ask-mit/how-much-will-climate-change-affect-world-economy

18. https://www.cbo.gov/publication/61146 

19. https://www.weforum.org/stories/2023/10/climate-loss-and-damage-cost-16-million-per-hour/

20. https://epic.uchicago.edu/news/climate-change-may-cost-38-trillion-a-year-by-2049-study-says/ 

21. https://www.cbo.gov/publication/61146

24. https://sustainability.stanford.edu/news/study-links-past-emissions-trillions-future-economic-damages 
25. https://pmc.ncbi.nlm.nih.gov/articles/PMC7157458/#s0155  

26. https://www.thegreenshot.io/uncategorized/environmental-effects-of-the-industrial-revolution/

27. https://www.weforum.org/stories/2025/01/technology-convergence-is-leading-the-way-for-accelerated-innovation-in-emerging-technology-areas/ 
28. https://www.eia.gov/energyexplained/renewable-sources/ 
29. https://www.weforum.org/stories/2022/04/visualizing-the-history-of-energy-transitions/