サステナビリティは曲がっても、折れない

Talking Heads with Alex Bernhardt

Daniel Morris: Hello, and welcome to the BNP Paribas Asset Management Talking Heads podcast. Every week, Talking Heads will bring you in-depth insights and analysis through the lens of sustainability on the topics that really matter to investors. In this episode, we’ll be discussing sustainability and sustainable investment. I’m Daniel Morris, Chief Market Strategist, and I’m joined today by Alex Bernhardt, Global Head of Sustainability Research. Welcome, Alex, and thanks for joining me.

Alex Bernhardt: Thanks, Daniel, it’s a pleasure to be here.

DM: Alex, I think this is one of those times when you hear the phrase repeated a bit too often – “may you live in interesting times”. Clearly, we do. Safe to say, everyone’s expectations about almost anything have been exceeded. Over the last several months, certainly that’s touched on things around sustainability, which is your remit.

As we’re aware, [there’s] a lot going on in the world, many policy changes impacting sustainability and sustainable investment. How do you assess the overall effect of all these developments?

AB: Well, there’s definitely been a lot of excitement or things to react to over the last six plus months in the regulatory sphere. From a sustainability perspective, certainly not all of it is positive to environmental or social outcomes.

Some of the things that I would cite that come top of mind for most [professionals] in the sustainability field include the efforts by the EPA [US Environmental Protection Agency] to deregulate carbon emissions or to make carbon emissions no longer considered a pollutant. This would undermine a lot of regulatory efforts over the last several decades to try and address carbon emissions in the US. That deregulatory effort is still ongoing, but it definitely is in the wrong direction for climate action.

The ‘One Big Beautiful Bill’ also had some implications for the Inflation Reduction Act in the US – undoing some of the clean energy policies that were viewed as beneficial to the trajectory of clean energy development in the US.

And then in Europe, too, there’s been an effort towards deregulation. The EU omnibus proposals, which are being evaluated actively right now, are looking to streamline the SFDR [Sustainable Finance Disclosures Regulation], the CSRD (Corporate Sustainability Reporting Directive] and all the other sustainability-related regulations in Europe, in an effort to make them more efficient.

But there are concerns about the sustainability-related implications of some of that deregulation in Europe. So overall, there’s definitely a lot of pressure against sustainability-related action happening in developed markets right now.

DM: You’ve talked a lot about changes taking place on the regulatory front, legislation that’s been passed, notably in the US. As far as markets and investors are concerned, probably what’s been top of mind has been [US import] tariffs over the last several months – certainly heightened concerns after Liberation Day [2 April] that this was going to have a very negative impact on GDP growth globally. If we think about the implications for sustainability, how do you assess it?

AB: I think it’s fairly similar on the sustainability side as it is on the economic side with tariffs. There are a lot of impacts in different directions. If you look at it from a sustainability perspective, tariffs are not all negative –they have the potential to produce a lot of positive environmental and social outcomes.

For instance tariffs could result in lower carbon emissions from shipping and possibly even lower consumption if people decide to buy less, which tends to have a beneficial impact on carbon as well.

It could result in the revitalisation of local economies and domestic job creation as manufacturing capabilities that have been offshored for some decades are reshored. It could potentially also produce circular economy benefits and cause people to try to recycle or reuse materials more and reduce waste.

Tariffs could also have the impact of increasing domestic investment by governments and all of those things are, are potentially beneficial to sustainability.

But each one of those coins has a flip side. Reshoring can also result in higher emissions from disrupted supply chains. Not all domestic manufacturing is as efficient as what exists offshore, for instance.

There’s also the potential for tariffs to increase inequality and unemployment by switching jobs to different jurisdictions. The net effect of that is always hard to assess.

There are also some risks to the clean energy transition that are occurring as a result of tariffs. Many parts of clean energy production, for instance, are sourced in developed markets from developing markets and have a lower cost point because of some of the manufacturing efficiencies and labour cost efficiencies that have been achieved over the last several decades. If those goods become more expensive and harder to obtain as a result of these tariffs, that could definitely be detrimental to clean energy build outs.

Then there’s also the potential for a breakdown in global cooperation. You know, retaliatory tariffs and all sorts of efforts around economic competition [can] cause cooperation to be harder across jurisdictions, and that can lead to a negative effect.

All this is to say that tariffs push and pull in a lot of different directions. It’s super important for sustainable investors that are looking at companies that have the potential to drive sustainable solutions and are more sustainability-oriented in their operating models to understand what the impact of tariffs might be on their specific business situation. [Investors need  to] work with their own assessments and with the company management to better understand what their plans are for addressing the impacts of these additional tariff costs.

Broadly speaking, I’d say that organisations that have already started (or are ahead of the game) in terms of domestic manufacturing or sourcing goods from nearby rather than farther away, or that have more diversified supply chains, are likely to be more resilient in the face of tariffs.

And also companies that have thought about and pre-planned some of their clean energy developments which obviously have [positive] ROIs [returns on investment] on the financial side, not just on the environmental side. They’ll [likely] be in better position at this point, having already built or already planned to build those [clean energy developments] out. That’s just a couple of examples of how tariffs should be considered in sustainability assessments.

DM:  I think it’s helpful that you point out the benefits as well as the costs from tariffs, because often we don’t focus on some parts of the economy or workers that could see some gains. The message we often hear is that free trade is always good everywhere, and that’s not necessarily the case. Free trade has costs and benefits. Similarly tariffs – costs and benefits. It’s up to us to try to assess where those are going to be. All of it sounds kind of complex, not a simple analysis. When you think about the future, what are some of the positive implications you have in mind?

AB: Well, we’ve seen a market correction to the upside in the prices of many solar companies over the last several weeks in response to the US Treasury Department’s clarification of the One Big Beautiful Bill guidance on the Inflation Reduction Act. I think the market reacted to that clarification from [the] Treasury positively because it was less negative than [had been] assumed.

So what we have seen is a price correction in some of those companies and sectors impacted. I think some of the policy overhang, the uncertainty around the policy direction, is being lifted and that lessening of uncertainty, is proving to be beneficial for stock prices.

So, even in the midst of some of this turmoil, there are points of clarification for investment that could be positive, definitely some opportunities for markets to invest in climate solutions, even though there’s [still] a lot of policy uncertainty.

DM: Alex, if I could summarise some of the key points that you shared with us, you acknowledge that it has been a challenging period recently, with some changes in legislation [and] regulations that have made it a bit more difficult for investors interested in sustainability and sustainable investment.

That said, if we think particularly about the impact of tariffs, you highlighted that there are going to be some potentially positive impacts. For example, you could see an improvement in terms of carbon emissions if you have more onshoring, less shipping, and so on. When you discuss the outlook, you also highlighted that with the big swings in sentiment we’ve had over the last several months, you’re starting to see a rebound in some of the stock prices for certain environmental stocks as investors reassess the outlook, with the idea that maybe it’s not quite as negative as they had assumed.

Alex, thank you very much for joining me.

AB: Thank you so much, Daniel. It’s been a pleasure.

DM: That’s it for this week’s episode of Talking Heads. If you would like more information about sustainability and sustainable investment, please reach out to your BNP Paribas Asset Management. contact or check out ViewPoint, our website for investment insights at viewpoint.bnpparibas.com. We recommend subscribing to Talking Heads on your favourite podcast channel such as YouTube or Spotify. You’ll receive your podcast episodes every week. If you like Talking Heads, leave us a positive review and a nice rating.

You’ve been listening to the BNP Paribas Asset Management Talking Heads podcast with me, Daniel Morris, and Alex Bernhardt, Global Head of Sustainability Research. Please do join me next week. Until then, take care.