Corbin Client Brief:
ESG Trends Shaped by Latest Executive Orders
Yesterday from the indoor Presidential Inauguration parade event at Capital One Arena, President Trump issued several executive orders that may be poised to meaningfully alter American policy and positioning. These orders, many of which were issued with the intent to undo the previous administration’s policies, touch upon issues that are critical to business, such as climate change, immigration, diversity, and government efficiency.
- Environmental Policy Shifts: Moves like withdrawing from the Paris Climate Accord and terminating government EV targets under the Green New Deal could lead to increased reliance on fossil fuels and erode corporate commitments to sustainability strategies.
- Immigration and Workforce: Tightened immigration controls could impact labor markets, supply chains, and workforce diversity.
- Diversity, Equity, and Inclusion: The revocation of DEI policies might influence corporate culture and recruitment practices.
- Government Operations and Efficiency: New initiatives like DOGE, tariffs, AI, and changes in federal employment practices could alter how businesses interact with government agencies, affecting everything from regulation to procurement.
This client brief aims to set the stage for understanding how these executive actions will, in our view, influence the three pillars of ESG.
As a reminder, in our Annual Letter to Our Clients published earlier this month, the first of three trends we highlighted that will shape 2025 is the unconventional and rapid-fire communication methods of the new administration. We strongly recommend the creation of “Trump Task Forces”, consisting of teams from investor relations, communications, legal, public relations, and senior leadership, tasked with monitoring remarks that could raise investor questions and/or concerns, especially if your company or industry faces criticism.
Summary of President Trump's Executive Orders Affecting ESG
Environmental
Withdrawal from the Paris Climate Accord
The United States has been directed to withdraw from the Paris Climate Agreement, echoing President Trump’s directive in 2017, and reversing the previous administration’s commitment to reduce greenhouse gas emissions. This move eliminates the United States’ legally binding targets for carbon reduction aimed at limiting long-term global warming.
- Note: While policy plays a role in GHG emissions trends, the economic landscape often has a more direct on-the-ground impact.
- Factors such as economic downturns, advancements in cheaper energy technologies, like natural gas from fracking, and significant events, like COVID-19, have historically had substantial effects on emission trends.
- Indeed, even while part of the Paris Accord, the U.S. was not on track to meet its reduction targets — and when the U.S. pulled out of the Accord during Trump 1.0, emissions continued declining — suggesting membership in such agreements might not be as influential as the economic and technological contexts that shape the energy sector.
The order further specifies the United States’ participation in the international climate finance plan has been revoked and rescinded, effectively cancelling commitments to financially support climate mitigation and adaptation efforts in developing countries.
Energy Emergency Declaration
A national energy emergency has now been declared, aimed at reducing regulatory barriers for fossil fuel production. It prioritizes domestic energy production, potentially accelerating projects like oil and gas drilling, and reducing the focus on renewable energy development.
Green New Deal Termination
President Trump halted the ‘Green New Deal’, a collection of former President Biden administration measures aimed at boosting green jobs, regulating the fossil fuel industry, and limiting pollution.
The executive order directs federal agencies to pause the distribution of funds that were allocated under both the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, effectively stopping the financial support for numerous initiatives aimed at environmental sustainability, infrastructure upgrades, and job creation in green sectors.
- These actions will likely face legal challenges since the funding directives were established by bipartisan laws, and any attempt to alter or halt their execution could be subject to judicial review.
To that end, President Trump has pledged to fill up strategic oil reserves and signed an order to “unleash Alaska’s extraordinary resource potential,” while also ending leasing to wind farms and revoking what Trump called an electric vehicle “mandate.”
Social
DEI Policy Revocations
These Federal Government orders mandate the cessation of any ongoing DEI programs, training, or initiatives that were designed to address systemic biases, promote diversity in hiring, and ensure equity in workplace practices.
Orders include:
- Rescinding former President Biden’s 2023 directive requiring government agencies to establish equity teams and a federal DEI steering committee;
- Mandating the cessation of all DEI programs, policies, offices, and positions across agencies and federal contractors;
- Removing the consideration of a job candidate’s commitment to gender identity or equity in federal hiring processes;
- And acknowledging only two sexes, male and female, as a “biological reality.”
Governance
Establishment of DOGE
Long discussed, this executive order establishes the Department of Government Efficiency (DOGE) to enhance federal operations through advanced technology and software, aiming to maximize government productivity and efficiency.
- Each federal agency is required to form a DOGE Team consisting of a leader, an engineer, a human resources specialist, and an attorney to implement the DOGE agenda.
Schedule F Implementation
Trump has reintroduced the “Schedule F” employment category, which removes job protections from federal employees classified as policy-focused, allowing for easier dismissal.
- The order emphasizes the need for accountability in the civil service, particularly among those in policy-influencing roles, citing low confidence among supervisors in their ability to remove employees for misconduct or poor performance. It aims to ensure that these personnel are fully accountable to the President, reflecting concerns about federal employees undermining executive policies.
Other Notable Executive Orders
Immigration and Border Security
Immigration reform is being pushed through a series of executive orders aimed at reinforcing border security and tightening immigration control. Actions include reinstating the “Remain in Mexico” policy, expanding physical barriers like the border wall, and enacting stricter measures for immigration enforcement, such as mobilizing troops to step up border enforcement as part of a broader crackdown.
Free Speech and AI
President Trump’s executive order on free speech focuses on reducing government interference in online content moderation, aiming to counteract perceived censorship and promote a freer online environment, similar to Meta’s recent move away from third-party fact-checkers to a community-driven fact-checking model.
Furthermore, President Trump has overhauled the previous administration’s AI-related policies by replacing President Biden’s executive order, which provided guidance on online safety through federal oversight, with a new policy promoting AI development under the principles of “Free Speech and Human Flourishing.” This new framework encourages transferring technology innovations from federal projects to the private sector, aiming to spur growth while potentially leading to a fragmented regulatory environment, akin to the current disparate state of U.S. privacy laws.
- Note: This approach calls for minimal government oversight, raising questions about the consistency of safety and compliance standards across the Tech industry.
Establishment of the External Revenue Service
President Trump announced the creation of the “External Revenue Service” (ERS) to collect tariffs, duties, and all revenue from foreign sources. This new agency aims to shift the burden of taxation from domestic revenues to international trade. The ERS is intended to start operations immediately.
In Closing
As these policy shifts begin to impact business operations and areas of investor interest, we’ll continue to monitor these developments and new ones closely. In the coming weeks, we’ll be providing timely analysis and strategic counsel to help you align your investor communication practices with these new frameworks.