The "One Big Beautiful Bill" and its Implications for ESG Investors

What is the reconciliation bill

The reconciliation bill is reshaping the U.S. policy landscape. Its key provisions include broad deregulation, a rollback of clean energy tax credits, deep budget cuts to federal agencies and social programs, and expanded incentives for domestic R&D and manufacturing. It also extends substantial tax cuts to both individuals and corporations.

While the reconciliation bill aims to boost economic efficiency and long-term growth, it is also expected to substantially increase the federal deficit. According to the Congressional Budget Office, the bill is expected to reduce federal tax revenues by approximately USD 4.3 trillion over the next decade, increasing the U.S. deficit from its current level of USD 1.8 trillion to an estimated USD 4.7 trillion. 

Environmental Impact: A setback for Clean Energy 

The bill's rollback of clean energy tax incentives means that wind and solar projects, clean fuel, and electric vehicle technologies will lose critical support. According to Princeton University’s Zero Lab, this could place over $500 billion in clean energy and transportation investments at risk. And Columbia University Center on Global Energy policy estimates that, new clean power capacity may be reduced by 50–60% over the next decade.

Deregulation favors sectors with historically negative environmental footprints such as oil & gas, mining, and utilities which stand to benefit from accelerated permitting and reduced compliance costs.