Wall Street is speculating on the effects of possible Donald Trump policy changes when he takes office in January 2025. JPMorgan analyst Virgina Martin Heriz weighs in on the potential impacts of a second Trump presidency on sustainable investing.

Onshoring: Heriz sees a second Trump administration modifying the Inflation Reduction Act (IRA), but doing so with a "scalpel, not a sledgehammer."

The JPMorgan analyst sees the domestic content portions of the IRA as the "most safe incentives" due to bi-partisan support of supply chain onshoring. Heriz points to First Solar, Inc. (NASDAQ:FSLR), SunRun, Inc. (NASDAQ:RUN) and Sunnova Energy International Inc. (NYSE:NOVA) as clean tech companies particularly positioned to benefit from supply chain onshoring.

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Hydrogen: Heriz also sees the 45V tax credit for clean hydrogen producers as likely to stay due to strong backing from traditional energy companies and Republican-leaning areas. Clean hydrogen companies including FuelCell Energy, Inc. (NASDAQ:FCEL) and Plug Power Inc. (NASDAQ:PLUG) are likely safe from policy changes under a second Trump administration, according to Heriz.

EV Incentives: The analyst does expect subsidies for electric vehicles to be downsized or repealed, including the 30D clean vehicle tax credit of up to $7,500 on the purchase of a qualifying EV. Additionally, Heriz anticipates tightening EV charging incentives like the 30C tax credit that covers up to 30% of the cost of each charger. Some companies that could be negatively impacted by the repeal of EV and related charging incentives include EVgo Inc. (NASDAQ:EVGO), ChargePoint Holdings, Inc. (NASDAQ:CHPT) and Blink Charging Co. (NASDAQ:BLNK).

Oil & Gas: Domestic oil and gas production is more influenced by market prices and global supply and demand rather than government policies, Heriz said. For this reason, the analyst expects a potentially reduced regulatory burden to be "helpful to the industry, but not life-changing in the short-term."

The Take-Away: While Heriz does expect policy changes to affect sustainable investing under the second Trump administration, she said that outflows in sustainable investing are mainly motivated by underperformance.

"Fund performance matters far more than politics," the JPMorgan analyst said.

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