The world’s biggest sovereign wealth fund has said it will back a shareholder proposal demanding that Nike, the sportswear giant, offers binding rights to workers in countries at high risk in terms of human rights.

The Norwegian wealth fund—Norges Bank Investment Management—said in a statement that its decision to support the resolution from Domini Equity Impact Fund is about “material sustainability”.

It says: “The board should account for material sustainability risks facing the company, and the broader environmental and social consequences of its operations and products.”

The decision comes at a time when sustainability and ESG have become highly divisive in US politics. Right wingers oppose “sustainability” policies in a host of arenas.

And watchdogs at the Securities and Exchange Commission are defending new climate risk reporting rules after a law suit was brought in an attempt to block them.

Elsewhere, Texas has been sued by a not-for-profit after a law was passed banning the state from doing business with organisations that “boycott” the oil and gas industry.

Toxic atmosphere

The toxicity of ‘ESG’ as a term has become so intense that BlackRock, the world’s largest fund manager, has said it will no longer use the term.

Despite the present climate, Norges Bank has reiterated its support for sustainability and ESG. Its chief executive, Nicolai Tangen, told CNBC: “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 Nike proposals asks for a report on how “worker-driven social responsibility” (WSR) principles and “binding worker” agreements would help the company identify and “remediate” human rights issues.

Domini says: “Many of Nike’s peers have taken steps to improve conditions for workers and remediate rights violations by employing WSR approaches or binding agreements with labour organisations, such as the International Accord and the Lesotho Agreement.

“In contrast Nike has not demonstrated the same level of due diligence in countries where binding agreements and WSR approaches to remedy are available and have proven to be essential in protecting vulnerable workers.”

Nike’s board recommended shareholders vote against the resolution. “The proposal is unnecessary,” says Nike, “because the company already shares how it identifies, assesses and manages human rights and labour risks and impacts throughout its supply chain.”

This season’s proxy season has seen many fund managers reduce their support for ESG-related resolutions. BlackRock has revealed it declined to vote for any of the 88 anti-ESG resolutions, a decision that underlies a drop in its support for ESG proposals from 6.7% in 2023 to 4% in the current year.

BlackRock said many pro-ESG resolutions were “poor quality” because they were “overly prescriptive” or “lacking economic merit”.

Norges Bank said it would support a “well-founded shareholder proposal”, but not one that “appears to impose a strategy or prescribe detailed methods, unrealistic timeframes or targets for implementation”.