Investors piled into ESG ETFs last week following Democratic candidate Joe Biden’s victory over President Donald Trump in the US election however without the Senate, Biden may not be able to implement his green revolution any time soon.

The President-elect put a green recovery at the forefront of his campaign manifesto including a pledge to invest around $2trn into clean energy infrastructure in areas such as transportation, electricity and building sectors over the next four years.

According to the Climate Action Tracker, this would reduce US emissions by 75 gigatonnes over the next 30 years, potentially avoiding a temperature rise of 0.1°C by 2100.

Along with promising to re-join the Paris Agreement 24 hours after entering the White House, the Biden administration is pushing towards a carbon-neutral power sector by 2035 and a net-zero economy by 2050.

As a result, ESG ETFs saw positive inflows last week as investors bet the news Biden had secured the 270 electoral votes required would accelerate the shift to a ‘greener’ economy.

According to data from ETFLogic, the Xtrackers MSCI USA ESG UCITS ETF (XZMU) saw inflows of $268m over the past week, as at 12 November, while investors poured the Xtrackers MSCI World ESG UCITS ETF (XZW0).

Meanwhile, the iShares MSCI USA ESG Enhanced UCITS ETF (EEDS), Invesco S&P ESG UCITS ETF (SPXE) and the iShares MSCI USA ESG Screened UCITS ETF (SDUS) pulled in a combined $239m last week, as at 13 November.

While Biden does not need the approval of Congress to re-join the Paris Agreement, he will need the backing of the Senate to push through his economic agenda.

It appears the Republicans will once again win the Senate led by majority leader Mitch McConnell who is renowned for blocking Democratic policy, especially during the Barack Obama era.

Added to this, McConnell’s Kentucky state is the fifth biggest coal producer in the US meaning it is very unlikely Biden’s green revolution plans will sit well with the Republican senator.

As Gilles Moëc, chief economist at AXA Investment Managers, said: “Republicans would rather cap carbon emissions through market mechanisms, with government “nudges”, while the Democrats are on the whole more supportive of direct intervention.”

With political stalemate on the cards, Biden’s green revolution is not likely to have as big of an impact as first planned however the direction of travel is heading only one way and that is towards a more sustainable future.