Institutional Ownership and ESG Performance : How does Norges Bank Investment Management impact the ESG performance of firms in its equity portfolio?

Raa, Kristoffer Utkilen; Tangen, Peder
Master thesis
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https://hdl.handle.net/11250/3088822
Date
2023
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Abstract
This paper assesses whether institutional ownership impacts the environmental, social, and

governance (ESG) performance of firms worldwide. To study this issue, we analyze financial

metrics and ESG scores on 5444 companies owned by the Government Pension Fund Global

managed by Norges Bank Investment Management. Our findings reveal that the ESG score of

companies owned by NBIM is significantly higher than that of the average of all companies

in the Refinitiv database. However, further analysis indicates that NBIM ownership has no

statistically significant effect on ESG performance. The effect of exclusion by NBIM on the

ESG score of a company is also insignificant according to our analysis. This implies that

NBIM screens firms for ESG performance to display their commitment to sustainability. We

theorize that the observed results could be attributed to inadequate ownership stakes, thereby

restricting NBIM’s impact on company ESG scores.