The head of Norway’s $1.6trn (£1.28trn) sovereign wealth fund says it will go on making investments according to ESG criteria, despite a change of heart in some quarters of the fund management industry.

Nicolai Tangen (pictured), chief executive of Norges Bank Investment Management, said that the fund remains committed to ESG investing and suggested there were greater opportunities as other investors pulled away from the topic as a key element in their asset allocation.

Speaking to US broadcaster CNBC, Tangen said: “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.”

The statement will come as a reminder to company boards that big fund managers still value ESG performance measures, even if others have turned away from sustainability as a key factor in their decision making.

Standing firm

BlackRock’s chief executive, Larry Fink, famously commented last year that the term “ESG” had been “weaponised” by figures on the right and left of US politics, though he added that the fund manager would not change its stance on investing in ESG stocks.

In February this year, both State Street and JPMorgan Asset Management withdrew from an investor group known as Climate Action 100+.

The Financial Times reported that the decision would “weaken the climate group’s plan to use shareholder influence to step up pressure on polluting companies to debarbonise”.

The ESG investing picture is mixed. According to FTAdviser in December, more than half of investors planned to increase their ESG investment in 2024, indicating sustainability retain its allure as an investment concept.

However, regulators have placed ESG claims made by investment managers under greater scrutiny for greenwashing. In January, Morningstar Direct, a data provider, reported that new launches of funds had all but dried up, with only six green lit in the second half of 2023, compared with 55 in the first six months.

There has been some debate about the measures used by investors to judge the ESG credentials of companies they invest in. This month the CFA Institute, an international association for investment professionals, said that fund managers find inconsistencies in climate data contained in corporate reporting. But it added that sustainability investing must continue.

“Until regulations and standards can provide meaningful solutions, investors should not be deterred from using climate-related data.”

Companies appear to be pushing ahead with their own ESG agendas, while regulators introduce more demands for mandatory disclosure of ESG factors, such as carbon emissions.

Norges Bank has a track record of pursuing a sustainability agenda. While they’re still in the game, boards will need to take note.