Norway’s Sovereign Wealth Fund Continues ESG Push Amid Green Political Backlash

Norway’s massive sovereign wealth fund with a value of $1.6 trillion declared its continuance to push for investments based on environmental, social, and governance (ESG) factors despite the emergence of green political backlash in some Western countries. This move comes at a time when environmentally responsible investing has become an issue steeped in polarization politically, particularly in the United States where Republican lawmakers have branded ESG as “woke capitalism” that prioritizes liberal goals over investment returns. The Democrats also intervened against such claims calling it ‘an attempt to manufacture a culture war and protect corporate special interests.’ Analysts predict that this year’s U.S presidential election will determine whether the pushback on ESG strategies would have far-reaching consequences or not. BlackRock, one of the world’s biggest asset managers reportedly spent over triple CEO Larry Fink’s security expenses in 2023 following criticisms regarding its stance towards environmentally conscious investments. Norges Bank Investment Management (NBIM), which manages Norway’s Government Pension Fund Global – the largest sovereign wealth fund globally, has invested funds into over 8,800 companies across more than seventy countries worldwide since inception in the nineties from its oil and gas sector surplus revenues. The controversy surrounding ESG investments recently led some Wall Street institutions to rescind on environmental pledges as well global sustainable mutual funds reportedly witnessed net quarterly outflows for the first time ever during Q4 2023, but in contrast, these funds attracted nearly $900 million of new money in Q1 this year. NBIM’s CEO Nicolai Tangen stated that while there was a backlash against green investments some years ago where boards were pressurizing investment managers to invest more into environmentally friendly projects with high prices and low returns, the situation has improved over time as competition for such opportunities lessened somewhat in recent times.