The ESG Commitment of the Norwegian Sovereign Wealth Fund: Is the Socially Responsible Behaviour of Companies Considered in its Investment Strategy?

Abstract

Sovereign funds are in a privileged position to concentrate on corporate sustainability and to incorporate investment criteria based on the ESG performance of companies. This paper examines to what extent the Norwegian sovereign wealth fund, which is the largest sovereign fund in the world in terms of assets, incorporates such criteria into its investment approach. We use a panel of 4,774 firms with data from 2018 to 2022 and estimate logit models to analyse the fund’s investment strategy. The findings show that high ESG performance from companies increases the possibility of being included in the investment portfolio of the fund.

Keywords: Ethics in Finance, Sustainable investment, Sovereing wealth funds