If you wanted evidence of the pushback against regulations and “woke capitalism” from Donald Trump, his suggestion that diversity and inclusion policies in air traffic control were partly to blame for the tragic crash in Washington DC surely provided it. With zero evidence, the US president turned a terrible tragedy into another episode of the culture wars that he is intent on provoking. In the regulatory area this includes not just diversity and inclusion, but most forms of regulation, including environmental rules and the green agenda. All good news for his tech bros pals, of course, and – he hopes – for Wall Street.
Trump said he had made the link between the crash and diversity and inclusion policies in hiring air traffic controllers “because I have common sense.” It is nonsense – can American voters really take this seriously? – but it was carefully considered and is part of a trend. The president told business leaders in Davos recently that he would “cancel all discriminatory diversity, equity and inclusion (DEI) nonsense”. His administration has already put federal DEI staff on leave and ended a host of programmes in the area.
It is easy to dismiss this as Trump being Trump. However, after a couple of months of the new presidency, there are clear signs of change internationally too. There are going to be questions posed here for Ireland, as an open economy with big links to the US.
A vital part of Trumpism is attacking the green agenda, already under pressure in the US and Europe from right-wing political populism. The new president has given climate scepticism a turbo boost. For years, businesses have been driven by a combination of regulation, investors and customers to adopt more sustainable practices. In turn, this helped push billions in new investment into sustainable projects in areas like green energy.
Trump’s claim that diversity policies caused plane crash is part of an attack on ‘woke capitalism’
If the Government does its job right, the comfortable classes won’t be happy
Ireland risks being caught in the middle of Trump’s tax war
I counted 276 new spending promises in the programme for government. This is delusional
More recently, however, sectors like renewable energy have hit financial problems worldwide and investors are asking questions. Politically, populists have taken advantage of public discontent, and a perception that climate policies are imposing costs and inconvenience. This has gained traction, despite increasing evidence from weather events of the building costs of a changing climate.
Companies have been accused for years of “greenwashing” – pretending to do something to cut emissions when in fact they were doing very little. Now the world has turned on its head and there is talk of “greenhushing”. This is companies keeping quiet about green initiatives for fear they will be accused of “woke capitalism”. Trump’s “drill, baby, drill” agenda could put this trend on steroids.
Businesses in Ireland and elsewhere are wondering what this means for them. It looks like manna from heaven for the likes of Ryanair’s Michael O’Leary, or the big aircraft leasing companies based here. However, if you are a banker offering discounts for green borrowing to fund investment, or lower-cost mortgages on houses with better Ber ratings, you might be scratching your head, as will the regulators in the Central Bank who have been pushing the sustainability agenda.
In recent weeks, the big six players in US banking – including household names like Goldman Sachs, Citigroup and JP Morgan – have pulled out of a high-profile global net zero initiative for the financial sector. It makes you wonder if they ever had any commitment at all. But the bigger question is whether this is performative stuff to win favour with Trump, or it means more important changes in how these companies do business and where they put their money.
The EU context for Ireland is changing, too. Under pressure because of low growth, the European Commission is promising in a new competitiveness plan this week to pull back “drastically” on the regulatory and administrative burden facing businesses.
[ Von der Leyen pledges to slash red tape to boost EU’s competitivenessOpens in new window ]
The EU Green Deal, the last commission’s plan to cut emissions, looks shaky. The rules that oblige companies to tick all the boxes – the corporate sustainability reporting directive (CSRD) – are set for “far-reaching simplification”. Criticised by many as a licence to print money for consultancy firms rather than a driver of real change, the implementation of these rules may now change significantly. Ireland was one of the early adopters, but other EU countries including France and Germany have in recent weeks called for delayed implementation of some of the reporting requirements.
There are difficult balances and decisions ahead here for Ireland. One is maintaining competitiveness – all too often taken for granted – and ensuring businesses here do not face a heavier burden than elsewhere, while at the same time maintaining real progress in areas like inclusion and climate change. Much of this will be framed by the EU’s response to what is happening, which looks uncertain and will be influenced by politics in France and Germany.
The second is responding to the Trump regulatory push. This is likely to include pressure and threats on the regulation of US tech firms, many of which have their international homes in Ireland, putting a big burden on Irish regulators. Europe should not put up with the pulling of social media further into the swamp, which has malign social and political implications, but it will face a fight.
And the third is the green agenda. Ireland’s ostensible strategy is to transition to a renewable, largely wind-driven energy system. The politics are challenging for the Government, too with the “whataboutery” set to grow as the world’s biggest economy turns its back on the Paris climate deal. And the economics may be tricky too. Delivery of offshore wind energy in particular has been slow and uncertain and the economics may become more difficult if the Trump agenda leads to more oil and gas production and lower prices.
It is still essential, however, for Ireland to develop its own supply of renewable energy. Surely the climate agenda will survive and, in time, revive internationally. After all, billions have already been poured into green assets worldwide and climate " events” make the need for change ever more evident. But real thinking is now needed on Ireland’s energy transition and persuading a public that the State has a deliverable strategy. If, for example, everything depends on electricity after the energy transition, then resilience to weather events like Storm Éowyn needs to be much greater.
Trump’s culture wars have just got real. He is changing the agenda. The context for Irish policy is changing too, and strategic thinking is required. Hoping to deliver a bowl of Shamrock to the White House on St Patrick’s Day is just a sideshow.
