Nicolai Tangen, chief executive of Norges Bank Investment Management, during a news conference in Oslo, Norway, Tuesday, Jan. 30, 2024. Norway’s $1.6 trillion sovereign wealth fund added to its bets on major technology companies last year after interest in artificial intelligence has led to a rise in the field.
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Norway’s $1.6 trillion sovereign wealth fund says it will continue to support investments based on environmental, social and governance (ESG) factors, mitigating the impact of a green political backlash.
It comes at a time when environmentally conscious investment has become a politically polarized issue in the Western world, particularly in the United States.
Republican lawmakers have decried ESG as a form of “wake up capitalism” that seeks to prioritize liberal goals over investment returns.
Democratic lawmakers tried to oppose this view, describing attacks on a range of ethically responsible business practices as “an attempt to manufacture a culture war and protect corporate special interests.”
Analysts expect the outcome of this year’s US presidential election to determine whether the push against ESG investment strategies will have a deep and lasting effect.
Nicolai Tangen, CEO of Norges Bank Investment Management (NBIM), told CNBC that the country’s investment fund continued to support the ESG agenda.
“We think it’s part of a long-term investment. You must really care [about] the impact companies have on the environment, otherwise you’re not going to make good long-term investments. So that’s important,” Tangen told CNBC’s “Squawk Box Europe” on April 23.
“And we think the fact that some others are moving away gives us a better opportunity to phase in. So, really interesting times.”
The headquarters of Norges Bank, Norway’s central bank, in Oslo, Norway, on Tuesday, January 30, 2024.
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BlackRock, the world’s biggest money manager, is estimated to have more than tripled security spending for CEO Larry Fink in 2023 after criticism of the firm’s stance on ESG investing, the Financial Times mentionted on April 21, citing a filing by the company.
NBIM manages the so-called Norwegian Government Pension Fund Global. The world’s largest sovereign wealth fund was established in the 1990s to invest the surplus revenues of Norway’s oil and gas sector.
To date, the fund has invested in more than 8,800 companies in more than 70 countries around the world, making it one of the largest investors worldwide.
Green investments
The ensuing ESG controversy prompted some Wall Street firms to do so back off from environmentally conscious commitments, while global sustainable funds was witnessed net quarterly outflows for the first time on record in the fourth quarter of last year.
However, the global sustainable capital world rebounded slightly in the first quarter. Data released via Morningstar on Thursday showed sustainable funds attracted nearly $900 million in net new money in the first quarter, compared with restated outflows of $88 million in the final quarter of 2023.
When asked about the current state of green investment, NBIM’s Tangen said the situation has improved slightly in recent years.
“I think this area is more attractive than it was because if you go back a few years, the boards were really into investment managers; you have to make more green investments,” Tangen said.
“There was tremendous competition for very few projects, prices were high, yields were low — and we think that’s improved a little bit over the past year,” he added.