The manager of Norway’s huge sovereign wealth fund is speaking out against what it says is the increasing portrayal of ESG factors in investment as political.
Nicolai Tangen, chief executive officer of Norges Bank Investment Management (NBIM), said in the central bank arm’s 2022 Responsible Investment report published yesterday that NBIM was worried by this development, which had been happening last year in particular.
Tangen told journalists at NBIM’s press conference in Oslo to launch the report: “We see it in particular in the US and we’ve seen a backlash starting in a way in Texas.
“And you’ve seen implications for some of the big asset management groups in terms of how they vote and behave and the pressure they are seeing from politicians,” he said.
“So it’s clearly become a political question, and we think that’s really worrisome,” said the CEO of the organisation which manages Norway’s NOK13.7trn (€1.26trn) Government Pension Fund Global (GPFG).
In the report’s introduction, Tangen wrote that responsible companies knew the environmental and social consequences of their operations, pursued opportunities and addressed risks – and that this was “simply good business management”.
“For me, ESG is not politics – it is common sense,” he wrote.
“We integrate ESG considerations into our analyses in order to make better investment decisions. This is how we build wealth for future generations,” the CEO wrote.
At the press conference, he said it had been well reported in the media that BlackRock was seeing a lot of pressure from various government institutions in America.
It seemed that because of the pressure, companies were spending more and effort on lobbying in that field, Tangen said.
Apart from the problem of political pressure, the CEO said ESG was also coming down on the agenda because of the losses business were sustaining in the current economic situation.
“We think that’s a worry too, because we think you need to work on this relentlessly whether you have a positive or negative P&L,” he said.
Tangen also singled out company board composition as a key issue that NBIM was concerned with in its report on responsible investment in the GPFG.
“Strong boards that can exercise effective oversight of management are fundamental for value creation,” he wrote, adding: “This means that the CEO and chair should not be the same person.”
“We need boards that are independent, have diverse competences and have enough time to do their job,” he said.
Asked at the press conference about the extent to which companies did in fact make change in response to shareholder engagement, Tangen said: “When it comes to the split of the chairperson and the CEO role in the US over the last 10 years, it’s gone from 45% to 35%.
“A lot of these things are moving in the right direction over time,” he said.
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