The second Trump administration is likely to make major changes to ESG legislation and to the federal government’s stance toward ESG. To gain insight on what shifts companies can expect, particularly those made through executive orders, we spoke with Krista McIntyre, a partner at law firm Stoel Rives, who specializes in environmental law.
This interview has been edited for length and clarity.
What are some changes we might see to ESG in the early days of Trump’s second term?
Using executive order authority, a new administration could take the same approach that the Biden administration took in its early days…As an example, the Biden administration’s Executive Order 14096 established a priority for environmental justice across the government, and that could be used as a template for a whole-of-government approach that the new administration might find successful…Through executive orders, the administration or the president cannot change a regulation, but they can direct agencies to take action like regulatory changes that manifest their priorities or policies.
My speculation about what might happen is informed by the Project 2025 handbook, which suggests a few things…We might see a direction for federal agencies to delete vocabulary from regulation, policies, grant requests, or funding criteria that is meaningful in the ESG, sustainability, and DE&I context. There might be a direction to remove words like “gender” or “equality” or “minority” from the regulations and policies and those other tools that federal agencies use to do their work.
We might see an executive order that eliminates government offices for chief sustainability officers. There is a White House chief sustainability officer, and then many of the federal agencies have sustainability officers…In addition, you might see this administration eliminating funding for those types of programs and priorities.
At an executive order level, there are things that can be conceptualized and then directed to the federal agencies to implement. For example, the FTC might get a direction to take further action on antitrust allegations for companies that are working together on ESG and sustainability goals, and heighten the priority for enforcement against those organizations.
If an agency does receive one of these executive orders, how would they go about complying with it?
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It remains to be seen how the executive order actually lays out the implementation of these expectations…There could be very specific actions outlined. There could also just be direction for various things, [such as] eliminating offices or defunding programs, and then the executive order could say that each agency is responsible for implementing the concepts and providing some regular report to the president on their progress.
What timeline would these changes happen on?
It’s variable as well. Again, if it’s regulatory changes, those things don’t happen very quickly.
Would any changes to regulation still need to go through the usual process?
Correct. There’s federal law, the Administrative Procedures Act, that governs how regulations are changed across the government…There’d be a proposed rule, public comment on that rule, and then the final rule, and obviously, those rulemaking actions are subject to challenge and litigation if there’s petitioners out there that choose to do that.
So a business that might be subject to these regulations would have a period of time to prepare.
Yes …by and large, the executive order authority is typically trickled down to the federal agencies…It will say to the federal agencies, “these are the things that we don’t support anymore and that your agencies are no longer empowered to manifest; now go to your regulated communities and make all that happen.” So businesses will be interested in what the executive orders say, because it will signal and foreshadow what the agencies that regulate them are going to bring.
How much force do the executive orders have?
The executive order authority is not the most effective way to make policy or political change fixed. The better tool for that is to change legislation. And I think there’s a possibility that during the Trump administration, some things that are ESG- and sustainability-related could become the topic of legislative change conversations in Congress, because you’ve got an alignment around the conservative views of the White House and the majority of Congress.