What do the US mid-terms mean for ESG and the green agenda?

A look at some of the moves and changes that could impact the US market

As the final votes are being tallied up, it’s clear that there have been some major changes in the US this week. But what, if anything, does it mean for the splintered green agenda that some political leaders in the country have been driving in recent years, and for the broader sustainable finance debate? RI takes a look at the key changes.


Jerry Brown, a powerful and long-standing voice on climate change in the US, has handed the reins to fellow Democrat Gavin Newsom after eight years as Governor of California. There is some debate about whether Newsom, former mayor of San Francisco, will be as strong on climate as his predecessor who travelled the world declaring that the US would still honour its environmental commitments despite Donald Trump. However, the signs are positive, as Newsom has been arguably more anti- fossil fuel firms than Brown, championing renewable energy and seeking to shut down the state’s nuclear power plants.

Another major leader in the country – and potentially another big loss on climate finance – Dave Jones, the California Insurance Commissioner who led controversial efforts to force insurance companies to disclose climate risks, will be replaced by either Steve Poizner (Independent) or Ricardo Lara (Democrat). Jones has served his maximum number of terms, and cannot stand a third time. Votes were neck and neck at the time of writing, with Poizner, having already served as Insurance Commissioner – he held the role between 2007 and 2011, when he was a Republican. He’s not overly vocal on climate change, but his campaign says that in California “wildfires and mudslides [are] becoming a year round threat, healthcare costs [are] continuing to grow, and cybercrime [is] threatening our economy”, adding that experience with the private sector as well as the public sector is needed. Lara is a more explicit climate campaigner, having been part of the legislative delegation at COP21, as well as COP23. He describes himself as “one of the most effective California environmental champions by consistently passing laws that improve health conditions and rein in air pollution”.

And in another blow to ESG in the US, John Chiang, will be stepping down to make way for a new California State Treasurer. Chiang ran for Governor this time round, but did not succeed and told RI recently that he wants to “continue to act in the public good” in his next role, considering teaching and the “private sector in the energy space”. He will be replaced by Fiona Ma, an established Democrat whose key priorities have so far included tax justice and gender. The State Treasurer sits on the board of California’s public pension funds, namely CalPERS and CalSTRS. Chiang is currently pushing for an ESG option to be included in the state’s new pension fund. He also undertook a roadshow around the US to try and mobilise demand for green bond issuance in the country, and confirmed $2bn of green bond issuance by the Treasury this summer. In August he signed the Green Bond Pledge, committing California to issue green bonds to finance infrastructure, with a view to encourage smaller municipalities within the state to engage with the asset class. It’s unclear how much of this will be taken up by Ma.

But not everyone is standing aside in California. State Controller Betty Yee was successfully re-elected, having been in place since 2014. She is a board member of Ceres and is outspoken on climate change and social justice, saying that “shareholder engagement on companies’ sustainability goals” needs to step up to compensate for the withdrawal of the US from the Paris Accord.h6. New York

New York State Comptroller and ESG advocate Thomas DiNapoli retained his role at the helm of the State’s $209bn public pension pot – receiving over two-thirds of the vote. Democrat DiNapoli, who has served as the state’s Comptroller for the last 15 years, faced opposition not only from a republican candidate but also from a Green Party politician pledging to divest the fund from fossil fuels. Divestment has been a contentious issue for the New York State Common Retirement Fund since New York City’s Comptroller, Scott Stringer committed to divesting the city’s five public pension funds from fossil fuels last year. RI interviewed DiNapoli ahead of the election, see here.

Staying in New York, Democrat politician Andrew Cuomo – who publically put pressure on DiNapoli to divest fossil fuels, last year – also coasted to a third term as New York State Governor. Under Cuomo’s leadership, New York State has seen the creation of a $1bn green bank as part of Cuomo’s Reforming the Energy Vision (REV) strategy, which seeks to build “a cleaner, more resilient, and affordable energy system”.

Rhode Island

Seth Magaziner, who has been a leading light in the US on corporate governance during his first term as Treasurer of Rhode Island, also won a second term at smallest state in the Union. In the Summer, Magaziner, a former equities analyst at Boston-based SRI firm Trillium turned Democrat politician, told RI that Rhode Island was soliciting advice around ESG for the state’s $8.3bn pension fund, seeking to become “more thoughtful about integrating ESG into our due diligence process [and] our manager due diligence process”.

In May, Magaziner achieved what he described as a “stunning result” when Rhode Island’s resolution at under-fire US student debt collection firm Navient achieved the backing of over 40% of shareholders at the company’s annual meeting.

Last month, Magaziner announced Rhode Island had filed a shareholder resolution at Facebook calling on the scandal-hit social media company to appoint an independent Chair, a position currently held by founder and CEO Mark Zuckerberg. It follows the disclosure by the company that nearly thirty million users may have had their data stolen.


Democrat Illinois State Treasurer Michael Frerichs, who co-filed on the resolution at Facebook, also won a second term in yesterday’s election. Earlier this year, Frerichs’ office, which manages an investment portfolio totalling $30bn, published its ‘Sustainability Investment Policy’, committing to “prudently integrate sustainability factors into its investment decision making, investment analysis, portfolio construction, due diligence and investment ownership”.


Chicago’s City Treasurer, Kurt Summer, announced last month that he wouldn’t be running in the next elections and will step down next year to focus on “addressing issues of economic disinvestment and lack of capital access” outside of an elected post. He has been a leader in pushing US cities towards ESG strategies, becoming the first to sign up to the PRI earlier this year, launching a $100m impact and local development fund and committing to integrate ESG into is $8bn treasury assets. His role was not part of this week’s elections.