World’s largest sovereign wealth fund says green backlash is a chance for it to ‘phase in’ — not out

Norway’s
$1.6
trillion
sovereign
wealth
fund
says
it
will
continue
to
advocate
for
investments
based
on
environmental,
social
and
governance
(ESG)
factors,
brushing
off
the
impact
of
a

green
political
backlash.

It
comes
at
a
time
when
environmentally
conscious
investments
have
become
a
politically
polarized
issue
in
the
Western
world,
particularly
in
the
United
States.

Republican
lawmakers
have
decried
ESG
as
a
form
of “woke
capitalism”
that
seeks
to
prioritize
liberal
goals
over
investment
returns.

Democratic
lawmakers
have
sought
to
oppose
that
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
U.S.
presidential
election
to
determine
whether
the
pushback
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
wealth
fund
continued
to
advocate
for
the
ESG
agenda.

“We
think
it
is
part
of
long-term
investing.
You
really
need
to
care
[about]
the
impact
that
companies
have
on
the
environment
otherwise
you’re
not
going
to
make
good
long-term
investing.
So
that’s
important,”
Tangen
told
CNBC’s “Squawk
Box
Europe”
on
April
23.

“And
we
think
the
fact
that
some
other
people
are
pulling
away
gives
us
a
better
opportunity
to
kind
of
phase
in.
So,
really
interesting
times.”

BlackRock,
the
world’s
largest
money
manager,
was
estimated
to
have
more
than
tripled
its
security
spending
on
CEO
Larry
Fink
in
2023,
following
criticism
over
the
firm’s
stance
on
ESG
investments,
the
Financial
Times

reported
on
April
21,
citing
a
filing
from
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
put
money
in
more
than
8,800
companies
in
over
70
countries
around
the
world,
making
it
one
of
the
largest
investors
across
the
globe.

The
ensuing
controversy
over
ESG
has
prompted
some
Wall
Street
firms
to

step
back
from
environmentally
conscious
commitments,
while
global
sustainable
funds

witnessed
net
quarterly
outflows
for
the
first
time
on
record
in
the
fourth
quarter
of
last
year.

The
global
universe
of
sustainable
funds
rebounded
slightly
in
the
first
quarter,
however.
Data
published
via
Morningstar
on
Thursday
showed
that
sustainable
funds
attracted
nearly
$900
million
of
net
new
money
in
the
first
quarter,
compared
with
restated
outflows
of
$88
million
in
the
final
three
months
of
2023.

When
asked
about
the
current
state
of
play
for
green
investments,
NBIM’s
Tangen
said
the
situation
had
improved
slightly
in
recent
years.

“I
think
this
area
is
more
attractive
than
it
was
because
you
go
back
a
couple
of
years
the
boards
were
really
on
the
investment
managers;
you
have
to
get
into
more
green
investments,”
Tangen
said.

“There
was
huge
competition
for
very
few
projects,
prices
were
high,
returns
were
low
—
and
we
think
that
has
kind
of
improved
a
bit
over
the
past
year
or
so,”
he
added.