• Large fund managers consider sustainability risks as they impact profits and financial markets.
• Global investors like Norway's NBIM and Japan’s pension fund stay committed to ESG investing amid the US's ESG backlash under Trump.
• European pension funds are cutting ties with those US asset managers who do not consider sustainability issues.

While the global ESG market is filled with commotion following President Trump's offensive against sustainable investing, the world's largest sovereign wealth fund has remained unshaken, continuing to focus on environmental, social, and governance (ESG) issues.

Norway’s Norges Bank Investment Management (NBIM), which manages close to $1.9 trillion in assets, remains composed when making ESG investment decisions, despite the overall ESG market facing backlash in the US from Republicans, more visibly from Donald Trump.

NBIM is not stepping away from its ESG strategy, notes a report by analysts at Jefferies.

READ MORE: Trump’s Policies Cause Temporary Delay to Net Zero Goals: Survey

NBIM, which invests in many large companies around the world, is pushing for ESG standards in conjunction with regulators and the companies it invests in. The asset manager also depends on ESG-related data to make investment decisions.

This approach is the same as that of Japan’s Government Pension Investment Fund, which is also resolutely committed to ESG despite global debates.

With regard to sustainable investing, the report says there is a wider chasm between the US and other regions, particularly Europe. Some European pension funds, especially from Scandinavia, the Netherlands, and the UK, are even severing ties with US asset managers who show reduced or no regard for ESG issues, including climate change and corporate responsibility.

Owned by Norges Bank, NBIM functions under the rules set forth by Norway's finance ministry and has set long-term goals to support the Norwegian economy through responsible investments. At the moment, it owns approximately 1.5% of all listed companies in the world, with large stakes in Apple, Microsoft, Nvidia, Alphabet (Google), Amazon, and Meta (Facebook).

ALSO READ: Amazon Says Net Zero Pledge Unchanged by Trump Policies

Jefferies says that with a focus on responsible investment and active ownership, NBIM’s long-term perspective is possible. It pursues higher returns with an acceptable level of risk. Between 1998 and 2024, the fund achieved an average annual return of 6.34%, marking the highest in its official earnings records.

In a previous report, Jefferies said that Japan's pension fund doubled down on its ESG strategy, signalling that ESG or sustainability risks might impact financial markets. Reducing such risks is paramount for large asset owners and fund managers like NBIM, concludes Jefferies' report.

Ends/

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Source: Bloomberg