‘Exploding’ Ethical Investing Demand Has Top Norway Bank Revamping Business

(Bloomberg) -- The biggest bank in Norway, DNB ASA, has reorganized its markets unit to respond to what it says is an eruption in demand for ethical investing.

Alexander Opstad, the 38-year-old who runs DNB Markets from Oslo, says the enormous interest he's seeing in high environmental, social and governance (ESG) standards comes from both issuers and investors. He also says equity prices increasingly reflect the new world order.

There's “exploding interest,” he said in an interview. What's more, “sustainable companies trade at a premium while some fossil-fuel producers are priced at cheaper levels than before.”

That means it's no longer feasible to provide ESG services as an afterthought, he said. “Ten years ago, you thought it was something you could do on the side.” Now, DNB has integrated ESG into its markets business, Opstad said.

Few regions are doing as much to build ESG into their investment habits as the Nordics. That approach has taken on greater urgency as the shift starts to affect asset prices. Norway's $1 trillion sovereign-wealth fund, the world's biggest, is among institutional investors to have cut back on its fossil-fuel exposure. And though the fund made clear its reasoning was partly financial rather than ethical, the move sent an important signal around the world.

Read About the Green Short -

A new breed of environmentally conscious investor is starting to bet against losers in the race to save the planet. From boutique money managers to French behemoth BNP Paribas SA, financial firms are setting up sustainability-focused mutual funds that mimic hedge-fund tactics. In an unusual move, they're not only buying stakes in the companies favored by green investors, but also shorting firms that are failing to make the shift to sustainability.

DNB Markets now offers research that examines the ESG risks of about half the 250 companies it covers. This year, it helped companies raise 3.6 billion euros ($4 billion) in ESG bonds, up 60% from 2018. But it says those figures will continue to grow.

Perhaps surprisingly, some of the demand for green finance comes from the oil industry. As Opstad puts it, “There are many nuances of green.”

To contact the reporter on this story: Jonas Cho Walsgard in Oslo at jchowalsgard@bloomberg.net

To contact the editors responsible for this story: Mikael Holter at mholter2@bloomberg.net, Tasneem Hanfi Brögger, Stephen Treloar

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