In addition to determining who will occupy the White House, elections next month could affect trillions of dollars in investments aimed at influencing public companies’ environmental policies and workforce disclosures.

Investments based on environmental, social and governance matters — known as ESG, and sometimes labeled generally as “sustainability” — gained legitimacy amid the COVID-19 crisis as they outperformed conventional strategies. Companies faced investor, worker, customer and government pressure to maintain employment rolls, prioritize diversity and focus on mitigating the climate crisis.

Election Day comes at an inflection point for ESG investing. Under a second term for President Donald Trump, some foresee continued but slower progress under an administration that has taken steps to limit the practice. If Democrat Joe Biden wins, they predict an acceleration of sustainability investing and quick moves to mandate transparency at U.S. companies.

Robert Hockett, a Cornell University law professor who is in touch with the Biden transition team, told CQ Roll Call that global pressure is growing on companies to disclose their impact on climate change and the treatment of workers.

“It looks to me like we’re in the midst of a trend where it’s not even begun to crest yet,” he said.

COVID-19 adds to focus on ‘human capital’

The pandemic heightened investor pressure on corporate leaders to provide information on worker safety, pay and retention as some shareholders warned companies that layoffs would be considered shortsighted. Outbreaks of the coronavirus among front-line workers compounded concerns. Then calls on corporations to act to end systemic racism put focus on workforce diversity disclosure.

“It’s more important than ever to pay attention to the human capital issues we’re facing because you can see as a result of COVID we’ve been greatly impacted,” Rep. Cindy Axne said in an interview. The Iowa Democrat introduced a bill before the pandemic that would require public companies to report workforce-related data.

Before 2020, investors focused on getting access to basic information about companies’ workforces, such as the number of employees, their locations and how many worked full time, part time or as contractors. This year, the priorities shifted to worker treatment, wage disparities and racial inequality, according to Bryan McGannon, director of policy and programs at The Forum for Sustainable and Responsible Investment.

Meanwhile the pandemic’s economic impact added to investors’ demands that companies address climate risk and other systemic risk. Sustainability investors describe both COVID-19 and climate change as risks that threaten harm across industries.

“COVID taught us what it means to not be ready for a systemic risk and how it impacts every single sector of our lives, our economy, our human well-being,” Mindy Lubber, president of sustainability advocacy nonprofit Ceres, told CQ Roll Call.

The Securities and Exchange Commission doesn’t mandate specific reporting on ESG issues. A Democrat on the commission, Allison Herren Lee, said climate change and human capital management reporting requirements would be her top priorities under a Democratic administration.

“Climate risk, just to be clear, has to be in there, but it’s not the only one,” she said in an interview. “There’s worker safety and diversity. There are also a lot of other actually pretty basic human capital metrics, like turnover, full-time versus part-time, those types of things.”

Whether that’s possible could hinge on the Nov. 3 elections, which would create vastly different regulatory and legislative possibilities for ESG disclosure depending on which party controls the House, Senate and presidency in 2021, investors and experts told CQ Roll Call.

Back to normal ‘is not what we want’

ESG disclosures would be a priority under a Biden administration and could be rolled out in year one as part of a bigger economic recovery package, said Hockett, who helped Rep. Alexandria Ocasio-Cortez, D-N.Y., draft the Green New Deal.

Although ESG disclosure may not appear as urgent as pandemic relief efforts, it provides an opportunity for Biden’s administration to “show itself willing to seek market-based solutions to problems,” Hockett said.

There’s still skepticism, however, that Biden would go far enough in his financial reforms, especially if financial executives end up in top policy positions, said Vasudha Desikan, political director for the Action Center for Race and the Economy.

“Going back to normal is not what we want because normal didn’t work for everyone, especially not for Black, Indigenous and people of color in this country,” she told CQ Roll Call.

Democrats prioritize workers

Democrats have proposed bills that would address ESG issues one at a time since taking control of the House in 2018, but advocates are expecting a more aggressive, holistic mandate if they control the Senate too.

Democrats may be open to a comprehensive approach.

“During a global pandemic, a climate crisis, and amid heightened demands for racial justice, Congress should work to harness the increased demand for strong ESG standards and disclosures and get people the information they need to make sound and socially responsible investments, instead of letting the Trump Administration limit ESG considerations,” Sen. Elizabeth Warren, D-Mass., said in a statement to CQ Roll Call.

The highest-ranking Democrat on the Senate Banking Committee, Sherrod Brown of Ohio, has said that Democrats would prioritize requirements for how corporations treat workers if they win the Senate, including worker safety, wages and ethics.

Republicans have largely opposed ESG disclosure proposals by Democrats, saying they’re overly burdensome to public companies and characterizing the consideration of environmental and social issues as politically motivated. The Senate under Republican control hasn’t taken up ESG bills.

Advocates: Trump will roll back gains

The last year of Trump’s first term has seen an acceleration of efforts by the administration that investors say are intended to silence shareholder voices and undermine sustainable investing. They fear another four years would bring increased attacks on ESG.

“A lot is at stake if Trump is reelected,” said Rachel Curley of the consumer watchdog Public Citizen, adding that she would expect the administration to continue to try to roll back financial regulations and quash ESG.

The SEC last month made it more difficult for shareholders to submit and resubmit proposals for consideration in corporate elections, a change expected to stifle some ESG pressure on companies.

The Labor Department this year proposed measures that would discourage retirement funds from considering ESG in investments and would warn against voting on environmental and social matters at shareholder meetings.

But administration policies are unlikely to halt momentum for sustainability disclosures because of pressure on companies from European regulations and lawsuits in the U.S., experts say.

Commissioners Lee and Hester Peirce, a Republican, have said that even if the SEC remains under Republican control, there may be room for compromise for individual metrics under the ESG umbrella.

Peirce did not offer examples of metrics that would meet her criteria. Within human capital management disclosure, Peirce rejected the case for reporting the number of employees or turnover.

Lee said that if the commission remains under Republican control, she will focus on pushing her colleagues to mandate climate risk reporting.