There are already a number of Mr Trump’s proposals that will benefit the sector. Plans for $500bn (£401bn) of infrastructure spending have already helped spur a rally in stocks linked to water infrastructure. Promises to cut corporate tax rates will boost environmental markets, which largely comprise small- and mid-cap companies, and rising interest rates should not pose issues for environmental firms, which tend to carry relatively low levels of debt.
If a business-friendly Trump administration is prepared to put economic pragmatism ahead of the ideological preferences of parts of its base, it will recognise – and reward – the economic potential of the environmental markets sector. It also raises enormous opportunities for job creation: for example, the solar industry created jobs 12 times faster than the overall rate of job creation in the US in 2015.
As candidate and president-elect, Mr Trump was nothing if not unpredictable. A few months into the new administration, this looks set to continue and investors can expect high levels of volatility.
But while we can expect the unexpected from the White House, there are broader forces at work that should give investors confidence that the underlying investment thesis for environmental markets remains compelling.
David Richardson is executive director and global head of marketing and client service at Impax Asset Management