lc.msc@cbs.dk

By Prof. Kristjan Jespersen, Ella Alette Jakobsen, Anna Sophia Burri, Oda Solend and Constantin Zeithammer

The 2024 US election took place against the backdrop of global climate talks at COP29, with the US playing a pivotal role in international climate action. The election represents a make-or-break moment for US climate ambitions: a continuation of climate commitments under Harris, or a rollback of policies such as the Inflation Reduction Act (IRA) under Trump. Since the IRA was enacted in 2022, investments in clean technology and infrastructure have totaled USD 493 billion, a 71% increase compared over pre-IRA levels (Rhodium Group, 2024). For institutional investors, such as asset managers, understanding the impact of the election on US climate policy in general, and the IRA in particular, is critical to asset management decision-making.

This blog examines the results of our research, on whether and how a Democratic victory would have changed the regulatory climate landscape, and the impact of three election outcome scenarios (retained, repealed, or partially repealed IRA) on the technology and consumer goods sectors. The focus was on the technology sector and the cyclical consumer goods sectors as these are among the industries most affected by the IRA. Our research focused on two companies within each sector, to illustrate how companies are affected differently by the IRA, depending on their core manufacturing activities. The impact of three election outcome scenarios was assessed for Marvell Technology (semiconductor solutions), QuantumScape  (solid-state lithium battery production for EVs), Ford (leading automotive manufacturer), and Nike (global leader in consumer sports products). 

Main Findings

1. A Democratic victory will lead to a continuation of current US climate policy and the IRA

The Democratic Party has prioritized the climate crisis as a major policy issue and will therefore emphasize continued climate regulation, centered on the key piece of legislation, the IRA. Despite the lack of clear climate action in public statements, Democratic candidate Harris emphasized the urgency of climate change and was expected to support the continuation of climate-related policies such as the IRA. Vice-presidential candidate Walz has a strong history of climate action and was seen as the climate pick among the running mates. 

2. The key US climate policy tool of the US, the IRA, will be adjusted rather than repealed entirely

Our analysis further supports the argument that the IRA is likely to be adjusted rather than repealed. This is due to the strong bipartisan and governmental support for the policy, but also due to the fact that IRA investments in clean technologies, such as EV battery manufacturing, have largely gone to Republican states. A potential repeal of the IRA is countered by market dynamics, cost reductions in clean technology, job creation in Republican and Democratic states, and competition with China, a key policy objective for any future administration. The sticky nature of policies already implemented, projects and investments made, and benefits realized creates path dependencies that make a full repeal of the IRA-related investment incentives less attractive to a Republican administration. Moreover, the mismatch between Trump’s policy rhetoric and reality argues against a complete reversal of US climate policy ambitions. During the last Republican presidency, more onshore wind capacity was installed under Trump than under Biden.

Source: Benchmark Source, 2024

3. A partial repeal of the IRA will have a significant but uneven impact on US core industries

Looking at the US technology and cyclical consumer goods sectors, a partial repeal of the IRA will have a significant but uneven impact on companies. In the technology sector, the withdrawal of investment incentives such as the clean energy or EV tax credits would have a major impact on the growing cleantech industry. This effect would spill over to related technology sectors, particularly battery manufacturing and semiconductor technology which face slower investment growth rates. However, due to their geopolitical importance for national security, supply chain stability, and technological leadership, some cleantech and semiconductor companies are expected to remain a top priority for policymakers and continue their upward trajectory regardless of the election outcome. In the cyclical consumer goods sector, EV manufacturers such as Ford rely heavily on IRA tax credits to support their long-term strategies. The repeal of these credits would reduce competitiveness, although potentially increased fossil fuel production could boost ICE sales. The retail sector is less affected, although ongoing ESG reporting would marginally increase costs.

Source: Oxford Economics/Haver Analytics, 2024

Recommendations for asset managers

First, asset managers should prioritize US investments in industries that enjoy bipartisan and government support, such as companies developing semiconductor technology while reducing exposure to cleantech subsectors that are vulnerable to electoral fluctuations, such as EVs and related battery manufacturing. Second, our analysis suggests prioritizing publicly traded companies in the US technology sector, as they have proven resilient to fluctuations in the climate policy regulatory landscape. Such companies are less vulnerable to a lack of bipartisan support, as well as a rollback of industrial policy or IRA investment incentives.

Asset managers can reduce their portfolios’ exposure to US policy changes by expanding investments in regions with more stable climate frameworks, such as the EU (EU Green Deal) renewable energy initiatives in Southeast Asia.

About the Authors:

Prof. Kristjan Jespersen is an Associate Professor in Sustainable Innovation and Entrepreneurship at the Copenhagen Business School (CBS). Kristjan is an Associate Professor at the Copenhagen Business School (CBS). As a primary area of focus, he studies the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance. He has a background in International Relations and Economics. 

Oda Solend works as a student assistant at Novo Nordisk, supporting a program designed to stimulate innovation in the life science ecosystem by sharing valuable knowledge and expertise with start-ups and academia. She is completing her Master’s degree in International Business and Politics at Copenhagen Business School (CBS), with a minor in ESG, where this project with Nordea Asset Management was developed by her team under the guidance of Professor Kristjan Jespersen. Oda also volunteers with femella, a network organisation empowering female students and young professionals in career and personal growth. She is currently preparing her Master’s thesis on green investments and political risks.

Constantin Zeithammer works as a student assistant in Export Compliance at A. P. Møller-Mærsk and is about to complete his Master’s degree in International Business and Politics at CBS. He holds two Bachelor degrees in Philosophy & Economics from the University of Bayreuth and in Politics, Philosophy & Economics from Charles University in Prague. Previously, Constantin worked in international cooperation for sustainable development at GIZ and in consulting at PwC. His main research interest is the green transition of the automotive industry and related challenges from a political economy perspective, including both market and non-market approaches. Constantin also has a minor in ESG and Sustainable Investments, during which he had the opportunity to develop this project with the team,  Professor Kristjan Jespersen, and Nordea Asset Management.

By Prof. Kristjan Jespersen and Kate Jennifer Ting

The urgent need to address the environmental and economic challenges posed by the traditional “take-make-dispose” economic model has never been clearer. Global resource depletion, waste generation, and biodiversity loss demand a transformative shift in how societies and businesses operate. The circular economy (CE) presents a promising alternative, aiming to minimize waste, optimize resource use, and extend product lifecycles. However, transitioning to this model is complex and requires innovative solutions. Digital technologies emerge as pivotal enablers in driving this transition, providing tools that can facilitate the implementation of circular strategies across industries.

At the heart of the transformation is the integration of digital tools—such as the Internet of Things (IoT), artificial intelligence (AI), and blockchain—into circular business models. These technologies enable companies to innovate across product design, manufacturing, usage, and end-of-life stages, ensuring materials are reused, recycled, or repurposed rather than discarded. Understanding how businesses adopt and implement these technologies offers valuable insights into the potential and limitations of digital-enabled circularity.

Understanding the Landscape: Methodological Insights

To explore the intersection of digital technologies and the circular economy, research was conducted with Danish companies actively collaborating with technology and consultancy providers. An interpretivist and exploratory approach was employed, incorporating qualitative and quantitative methods. Semi-structured interviews provided a detailed understanding of the drivers, challenges, and impacts of digital technology on CE implementation.

The analysis was guided by frameworks such as the 9R strategies (Refuse, Rethink, Reduce, Reuse, etc.) and Product Life Cycle (PLC) stages, offering a structured lens to evaluate digital interventions. These frameworks enabled the identification of patterns and best practices, while theoretical perspectives such as the Natural Resource-Based View (NRBV) and Organizational Information Processing Theory (OIPT) provided deeper context on resource utilization and information management.

Key Findings

1. Bridging Awareness and Action

The study revealed that Danish companies exhibit varying levels of awareness and adoption of circular strategies. While recycling and remanufacturing are commonly implemented, strategies like rethinking and reducing—critical for early-stage interventions—are less prevalent. Awareness is highest in sectors with strong regulatory frameworks and consumer demand for sustainability, highlighting the role of external pressures in driving adoption.

2. Digital Technologies as the Game Changer

Digital technologies were found to be instrumental in supporting CE strategies across all stages of the product lifecycle. Key examples include:

• IoT: Enabled real-time tracking of materials, improving logistics and facilitating reuse and remanufacturing efforts.
• AI: Optimized resource allocation through predictive analytics, enhancing operational efficiency and decision-making.
• Blockchain: Enhanced transparency and traceability within supply chains, ensuring compliance with CE principles and reducing inefficiencies.
• Digital Product Passports (DPPs): Provided critical data on product composition and lifecycle, aiding recycling, repair, and remanufacturing effort and therefore supports a wide array of circular strategies across several product lifecycle stages.

These technologies demonstrate significant potential in addressing key challenges related to circular economy (CE) implementation, such as material traceability, data fragmentation, and the creation of collaborative ecosystems. The table below summarizes the most common applications of digital capabilities found in enabling circular strategies:

3. Drivers and Challenges

The study identified several drivers that encourage the adoption of digital-enabled CE models:

• Regulatory frameworks: Policies such as the EU’s Circular Economy Action Plan and Corporate Sustainability Reporting Directive incentivize businesses to embrace sustainability.
• Consumer demand: Increasingly, customers value and prefer sustainable products, pushing companies to innovate.
• Internal motivations: Cost savings, risk mitigation, and brand differentiation also play a role.

However, several barriers hinder progress:

• High implementation costs: The initial investments required for digital infrastructure, particularly for SMEs, remain a significant hurdle.
• Cultural resistance: Organizational inertia and lack of awareness often impede the transition to CE models.
• Fragmented data systems: Siloed and non-interoperable digital platforms limit the seamless integration of CE strategies.

4. Innovating Business Models

The research highlighted how digital technologies are enabling the shift to innovative business models such as Product-as-a-Service (PaaS). These models emphasize extending product lifecycles through rental, repair, and refurbishment services, reducing waste and creating new revenue streams. For example, take-back systems supported by IoT and blockchain have become effective tools for ensuring products re-enter the value chain.

Companies adopting these models report enhanced customer engagement, streamlined operations, and alignment with sustainability goals. However, scaling these efforts requires significant collaboration across value chains and alignment with broader regulatory and market trends.

Implications and Future Directions

The findings underscore the critical role of digital tools in advancing CE goals but also highlight the systemic challenges that need to be addressed. Collaborative ecosystems—spanning suppliers, technology providers, and regulators—are essential for achieving seamless integration of circular strategies. Building trust, transparency, and interoperability within these ecosystems is key.

Moreover, fostering a cultural shift within organizations is crucial. Leadership must prioritize sustainability as a strategic objective, embedding CE principles into core business practices. Investing in talent and fostering a data-driven culture are equally important for leveraging the full potential of digital technologies.

Scaling these efforts will also require targeted support for smaller enterprises, which often lack the financial and technical resources to implement CE strategies. Policymakers can play a pivotal role by providing incentives, reducing barriers to technology adoption, and fostering public-private partnerships.

Conclusion: Turning Potential into Reality

The integration of digital technologies into circular economy strategies offers a path toward sustainable and resilient business practices. By addressing existing barriers and fostering innovation, companies can transition from linear to circular models, achieving both environmental and economic benefits. The experiences of Danish companies provide a valuable roadmap for others, illustrating the transformative potential of digital-enabled circularity. As the urgency for sustainable solutions grows, the EU stands as a model for leading this global transformation.

About the Authors:

Prof. Kristjan Jespersen is an Associate Professor in Sustainable Innovation and Entrepreneurship at the Copenhagen Business School (CBS). Kristjan is an Associate Professor at the Copenhagen Business School (CBS). As a primary area of focus, he studies the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance. He has a background in International Relations and Economics. 

By Prof. Kristjan Jespersen, Walter Bachmann, and Tobias Warkotsch 

In an era marked by escalating climate extremes and accelerating biodiversity loss, the urgency to preserve the world’s forests has reached a critical moment. Recent data reveals a dip in deforestation around 2020 – likely due to the global slowdown caused by the COVID-19 pandemic – followed by a sharp resurgence, with deforestation rates surging by 2023. Commodity-driven deforestation is responsible for 18% of global forest loss and remains a major driver of ecological devastation. Its impact is even more pronounced in tropical regions, where it drives nearly 25% of forest loss. This destruction is primarily fueled by agricultural expansion, with commodities such as beef, soy, and palm oil being major contributors, particularly in Latin America and Southeast Asia. If treated as a country, commodity-driven deforestation would be the third-largest emitter of greenhouse gases worldwide, surpassed only by China and the United States. 

Figure 1: Comparison of Greenhouse Gas Emissions in 2023 across countries and commodity-driven deforestation. Emissions are measured in billion metric tons of CO₂ equivalent (GtCO₂e). 

This trend is not just alarming; it is edging us closer to an irreversible tipping point. Without immediate and collective action, the damage to our planet’s carbon stores, water cycles, and ecosystems will be permanent, with catastrophic consequences for future generations. Stakeholders, including consumers, corporations, financial institutions (FIs), and policymakers, must recognize this as the critical and final opportunity to demand and implement transparent, accountable, and sustainable forest management, as the time for action is not just urgent but our last chance to prevent irreversible harm and secure a sustainable future. Our research, conducted at the Copenhagen Business School and supported by Federated Hermes Limited, uses data from the Forest IQ dataset to cast light on how corporations and FIs across different regions tackle (or fail to tackle) deforestation risks.  

This study leverages the Forest IQ database to analyze deforestation exposure and performance reporting across a diverse range of companies and FIs. Financial materiality for the value chain is excluded due to negligible significance and unreliable scores from limited dependencies. First, deforestation exposure assesses the extent to which firms or FIs are linked to high-risk commodity related activities, that are key drivers of deforestation. Finally, performance reporting evaluates the quality, transparency, and depth of entities’ commitments and actions reporting regarding deforestation and associated human rights issues.  

It provides a comprehensive perspective by examining corporate value chains – including producers, traders, manufacturers, and retailers – as well as FIs such as banks and asset managers. Below, we delve into the core findings from our analysis, highlighting the surprising disparities among commodities and regions, as well as the emerging opportunities that might hold the key to future solutions. 

Value Chain Findings 

The role of commodities in driving deforestation varies significantly across industries. In the following, the value chain findings focus on the three major drivers of commodity-driven deforestation captured by the Forest IQ dataset: cattle, palm oil, and soy. Like cattle, soy is predominantly produced in Latin America, whereas palm oil production is concentrated in Southeast Asia. 

Cattle remains the largest contributor to tropical deforestation, yet surprisingly, it exhibits low reported deforestation exposure. This discrepancy is likely due to underreporting and the prevalence of deceptive practices. Performance reporting scores are low, with limited public pressure and deforestation reporting largely absent. However, performance reporting tends to improve further down the value chain, despite the concentration of manufacturer headquarters in Asia, the worst performing region. 

In contrast, palm oil demonstrates the strongest performance reporting among commodities. Public scrutiny and certification schemes, such as the Roundtable on Sustainable Palm Oil (RSPO), have played a significant role in fostering transparency and accountability. Palm oil also shows the smallest gap between deforestation commitments and actions reporting, indicating that many firms in the sector have begun aligning their policies with measurable outcomes. Despite a high concentration of manufacturers in regions with weaker sustainability practices, such as Asia, these firms often outperform retailers due to the pressure to achieve certifications and meet consumer expectations for sustainable products. 

Soy’s performance reporting falls between cattle and palm oil, reflecting its position in the middle in terms of both sustainability initiatives and simpler supply chain dynamics.  

The analysis of sustainability commitments and reporting practices reveals nuanced trends that are hidden within the underlying datapoints. No deforestation commitments are more common than no conversion commitments, yet the latter demonstrate stronger adherence to additional criteria, such as cut-off dates and comprehensive coverage of operations. No conversion ensures no natural ecosystems are cleared, unlike no deforestation, which focuses only on forests. However, a troubling trend is the significant decline in commitments to protect activists at higher levels of the value chain, suggesting an increased tolerance for or use of intimidation tactics against scrutiny. Reporting often emphasizes positively framed metrics, such as areas free from deforestation, while omitting data on negatively framed outcomes, such as land already deforested. 

Financial Institutions Findings 

FIs hold substantial leverage in addressing deforestation but demonstrate considerable variation in commitments and actions reporting. Deforestation exposure is highly concentrated, with the top 10 FIs accounting for nearly one-third of total financial exposure. North America has the highest deforestation exposure, with few FIs bearing substantial financial risk. 

Performance reporting highlights significant trends. Palm oil consistently outperforms other commodities, followed by soy. However, performance distribution remains highly skewed, with the majority of FIs failing to meet minimal standards. Deforestation commitments reveal critical gaps. Cut-off dates for holdings are rarely implemented, and policy coverage often excludes key operational areas across FI portfolios. Human rights commitments emphasize labor rights but show limited progress on gender equality. While Free, Prior, and Informed Consent (FPIC) rights receive attention, indigenous rights and activist protection remain largely excluded. Actions reporting demonstrates a preference for superficial compliance measures, such as identifying non-compliance and implementing grievance mechanisms, rather than resource-intensive solutions. Active engagement with holdings is notably limited. 

Regionally, the European Union (EU) leads in overall performance reporting, with Asia following. European non-EU countries, Latin America, and the Middle East show average performance. North America performs the worst despite its high financial exposure, while Africa and Oceania lag. Oceania, however, excels in human rights commitments.  

Figure 2: FIs performance reporting scores per country. Darker blue indicates a better score, while lighter blue represents lower scores. 

Comparative Analysis: Value Chain & Financial Institutions  

The comparison between FIs and firms in the value chain highlights both similarities and differences in performance reporting. While firms in the value chain perform better than FIs, they still fall short of achieving sufficiently robust and reliable performance reporting. A key similarity is that palm oil consistently leads, with soy trailing behind. Across both FIs and firms, human rights commitments tend to outperform deforestation commitments, a trend that extends to actions reporting for the value chain as well. Notably, the EU, as a headquarters region, stands out as the best-performing region for both FIs and retailers, which is likely due to stricter regulations such as the Corporate Sustainability Reporting Directive (CSRD) and the EU Deforestation Regulation (EUDR). 

However, important differences exist between the two groups. FIs tend to show stronger actions reporting than commitments, driven by their indirect involvement. Additionally, increasing regulatory pressure compels FIs to provide comprehensive deforestation reporting. On the other hand, firms within the value chain show stronger commitments compared to actions reporting, largely because of their direct control over impacts. Public scrutiny often prioritizes commitments, but implementing tangible actions remains a significant challenge. Furthermore, Asia emerges as the weakest region for the value chain, attributed to low regulatory enforcement and the prioritization of food security concerns. These findings underscore the varying dynamics shaping performance reporting across FIs and the value chain. 

Opportunities in Fighting Deforestation 

Agroforestry has seen only a few trial runs across commodities, making its use relatively uncommon despite its potential. Certification schemes are more widely adopted but face clear challenges, particularly with enforcement and credibility. However, there is a positive outlook on leveraging satellite imagery, artificial intelligence, and on-the-ground investigation technologies to monitor and combat deforestation effectively. FIs also hold significant influence, as they can exert pressure on companies to implement deforestation-free policies, driving meaningful change in supply chains. 

Conclusion 

In conclusion, preserving the world’s forests in the face of commodity-driven deforestation is a critical challenge with far-reaching ecological, social, and economic implications. This study sheds light on how value chains and FIs are navigating deforestation risks and responsibilities. While some progress is evident, particularly in the palm oil sector, significant gaps remain in both commitments and actionable measures across commodities and regions. 

The findings highlight the need for robust and enforceable deforestation-free policies, supported by advanced monitoring technologies like satellite imagery and artificial intelligence. FIs hold unique leverage to push for systemic change by aligning capital flows with sustainability goals, while firms within value chains must focus on translating commitments into impactful actions. 

Collaboration among governments, corporations, and FIs is crucial to improve practices, enhance transparency, and adopt innovative solutions, ensuring forest protection and sustainable futures for dependent communities. 

About the Authors:

Prof. Kristjan Jespersen is an Associate Professor in Sustainable Innovation and Entrepreneurship at the Copenhagen Business School (CBS). Kristjan is an Associate Professor at the Copenhagen Business School (CBS). As a primary area of focus, he studies the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance. He has a background in International Relations and Economics. 

Walter Bachmann is an ESG Research Assistant at Nordic ESG Lab and a master’s student in Finance and Investments at Copenhagen Business School. He holds a bachelor’s degree in International Business Administration from Tallinn University of Technology, graduating with First Class Honors. Before joining Nordic ESG Lab, Walter worked as an M&A Analyst at LNP Corporate Finance, where he actively participated in deals from start to finish. He is proficient in developing complex financial and valuation models, as well as creating investor and client presentation materials. This year, Walter is focusing on sustainability by pursuing a minor in ESG at Copenhagen Business School. He is also actively involved in Oikos Copenhagen, a student-led initiative promoting collaboration for a sustainable future. 

Tobias Warkotsch is an ESG Research Assistant at Copenhagen Business School’s “Making Oceans Count” project and a master’s student in Finance and Investments, pursuing a minor in ESG. He holds a bachelor’s degree in Business Administration and Economics from the University of Passau, Germany. Before joining the “Making Oceans Count” project, Tobias gained experience as a consultant intern at Roland Berger and KPMG, where he contributed to M&A, restructuring, and ESG projects, showcasing his expertise in financial modeling, due diligence, and supplier analysis. He also worked at BMW, where he focused on sustainability, including CO2 emissions quantification and the development of circular economy strategies.

By Prof. Kristjan Jespersen and Michele Sacchi

In an era where climate change and social inequality dominate global conversations, corporations are increasingly finding themselves at the center of scrutiny, with stakeholders demanding accountability not just for profit-making but also for their environmental, social, and governance (ESG) practices. The stage is set: NGOs (Non-Governmental Organizations) are leveraging their influence to drive corporate change through activism. This activism can have significant consequences on a firm’s financial performance, yet its true impact has remained underexplored. Research focusing on European public firms reveals how NGO campaigns influence stock values, offering insights into how companies navigate the pressures of sustainability-driven stakeholders.

The research delves into the relationship between NGO activism and the stock performance of 474 public European companies from 2014 to 2023. Through an extensive dataset of 13,907 NGO campaigns, the study employs event study methodology to measure how these campaigns impact companies’ cumulative abnormal returns (CAR). The findings paint a nuanced picture of activism’s influence on financial markets, highlighting key variables such as media coverage, NGO size, and the role of positive sentiment in shaping market reactions.

1. NGO Campaigns and Positive Stock Performance

Contrary to the negative expectations often associated with activism, the study found that, on average, NGO campaigns positively impacted firms’ stock prices. This indicates that, while companies may face short-term backlash from activist campaigns, the long-term benefits of aligning with NGO goals can be economically rewarding. Firms with robust stakeholder relationships or those that engage proactively with NGOs are better positioned to benefit from these campaigns. This finding emphasizes the evolving role of corporations in balancing profit with purpose, demonstrating that businesses can enhance their financial performance by responding to societal and environmental concerns.

2. The Influence of Media Coverage

Interestingly, the study found that increased media coverage tends to reduce the positive impact of NGO campaigns on stock prices. While it might be assumed that heightened attention to NGO-led campaigns would amplify their effect, this finding suggests that extensive media coverage may create a perception of overexposure or sensationalism, diluting the campaign’s credibility. Investors may view such coverage with skepticism, fearing that it could lead to reputational damage or regulatory scrutiny. Therefore, firms under intense media scrutiny might be more vulnerable to market volatility, while those flying under the radar benefit from quieter, more focused activism.

3. The Role of NGO Size and Origin

Another critical finding is that the size and origin of the NGO significantly influence campaign outcomes. Large NGOs, particularly those based in the US, have a greater positive impact on European firms’ stock value. This could be attributed to the larger resources and greater reach these NGOs possess, allowing them to mount more effective and high-profile campaigns. Moreover, US-based NGOs, which often set global agendas, bring international attention to issues, thereby increasing the stakes for companies. European firms, therefore, benefit from associating with well-established NGOs that hold substantial sway in global sustainability debates.

4. Sentiment Matters: Positive vs. Negative Perceptions

The research highlights the critical role of sentiment in NGO campaigns. Campaigns framed with positive sentiment, such as collaborative efforts to enhance sustainability or improve social welfare, significantly boost stock prices. On the other hand, campaigns characterized by negative sentiment, such as those highlighting corporate failures or malpractices, tend to have less favorable or even detrimental effects on stock performance. This suggests that the narrative surrounding activism is crucial—firms that engage in positive storytelling and meaningful partnerships with NGOs can leverage activism to improve their market performance.

Why This Matters for Academics and Practitioners

The findings of this study are highly relevant to both academia and business practitioners. For scholars, it adds a quantitative layer to the growing body of literature on ESG performance, highlighting the tangible financial impact of NGO activism. This underscores the crucial role NGOs play as experts and advocates in setting new regulatory standards, helping define best practices in ESG. Furthermore, the study emphasizes the need for further research into secondary stakeholder influence, particularly how non-governmental players can reshape corporate strategies and market behavior. This shift reflects a new concept of the rational market player within the realm of Social Finance, where companies balance financial goals with social and environmental responsibilities. For practitioners, the research offers valuable insights into navigating the complexities of NGO activism. It shows that companies can mitigate risks and even capitalize on NGO campaigns by aligning their business strategies with societal and environmental goals.

As the world moves towards a more sustainable and socially responsible future, the relationship between corporations and NGOs will continue to evolve. Firms that embrace NGO activism as a strategic asset rather than a liability stand to gain not only in public perception but also in financial performance, driving long-term value creation in the process.

Acknowledgment:
We gratefully acknowledge Sigwatch for providing the dataset on NGO activism, which was instrumental in supporting the analysis and findings presented in this article.

About the Authors:

Prof. Kristjan Jespersen is an Associate Professor in Sustainable Innovation and Entrepreneurship at the Copenhagen Business School (CBS). Kristjan is an Associate Professor at the Copenhagen Business School (CBS). As a primary area of focus, he studies the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance. He has a background in International Relations and Economics.

Michele Sacchi has worked in the finance team at By-Expressen, a bike messenger logistics and distribution collective company in Copenhagen. He is currently approaching the non-profit environment by participating in a volunteering project about microcredit in India. He is concluding his master’s degree in Applied Economics and Finance from Copenhagen Business School (CBS), where his research explored the impact of NGO activism on public European firms’ stock value, particularly highlighting the important role the NGOs should hold in reshaping the existing financial system. Michele also holds a minor in ESG and Impact Investments, during which he had the opportunity to develop this project with the team and Professor Kristjan Jespersen.

By Prof. Kristjan Jespersen, Walter Bachmann, and Naomi Villaruel.

In the evolving landscape of corporate governance, the role of Environmental, Social, and Governance (ESG) considerations has never been more critical. With global standards such as the IFRS S1, IFRS S2, and the European Sustainability Reporting Standards pushing companies to improve transparency and accountability, corporate boards in Norway are facing a pivotal moment. The sustainability expertise gap across Norwegian boards has emerged as a significant challenge, creating pressure for companies to elevate their governance structures to meet these evolving demands. The urgency is amplified by the forthcoming Corporate Sustainability Due Diligence (CSDDD) directive, which mandates clearer evaluations of sustainability efforts at the board level. This blog explores the burning platform of ESG expertise shortages in Norway and presents key findings from a recent assessment.

The pressing issue at hand is that most Norwegian boards are ill-prepared to navigate the complexities of modern sustainability demands. According to a recent analysis, 61% of Norwegian boards only meet minimal ESG standards, with none fully aligning their competencies with the sustainability challenges they face. This lack of preparedness is not only a problem of perception but also one of regulatory compliance, as boards are now required to incorporate sustainability risks into their financial and strategic oversight. The lack of professional experience in sustainable business practices—65% of boards report no relevant expertise—is a critical vulnerability. With global frameworks mandating deeper integration of sustainability, Norwegian companies risk falling behind without significant improvements in boardroom competency.

A standout finding from the assessment is the comparative underperformance of Norwegian boards, particularly when viewed against international benchmarks. Norwegian boards achieved a competency score of just 12%, falling below the global average of 16.4%. While marginally outperforming their Scandinavian peers in Sweden and Denmark, the difference is minimal, signaling a broader regional issue. Despite this, a small subset of Norwegian companies, such as Wilh. Wilhelmsen, stand out. Wilhelmsen’s board achieved an impressive 34% competency score, showcasing how diverse expertise can lead to more effective governance. The company’s performance highlights the critical role that board diversity and experience play in navigating complex sustainability challenges.

Several factors contribute to the overall deficiency in ESG expertise across Norwegian boards. The most significant area of weakness is the role score, which evaluates directors’ professional backgrounds in sustainability-related positions. A concerning 94% of Norwegian boards fall short of the average performance benchmark, underscoring the need for urgent improvement. The assessment also revealed that Norwegian boards heavily rely on academic qualifications, particularly in sustainability-related fields. While formal education is valuable, it is insufficient by itself to ensure robust ESG governance. Practical experience in implementing sustainable business practices is equally, if not more, important. This imbalance highlights a gap in professional sustainability experience that needs to be addressed through targeted board training and development programs.

The findings also suggest that Norwegian companies have significant room for growth in other key governance areas, such as service experience and committee engagement. No Norwegian board scored above 50% in the committee score, indicating that many lack the formal structures necessary to drive sustainability initiatives effectively. Without well-functioning committees dedicated to sustainability, boards may struggle to set realistic targets or effectively oversee their company’s ESG strategies. This underperformance in critical governance functions creates vulnerabilities that could hinder long-term success in a world where sustainability is becoming a non-negotiable business imperative.

In conclusion, Norwegian boards are at a crossroads when it comes to integrating sustainability into their governance frameworks. While there are some positive examples, such as Wilh. Wilhelmsen, most boards are struggling to meet the demands of the modern corporate governance landscape. The need for enhanced boardroom competencies in sustainability is clear, as global regulations and investor expectations continue to evolve. Addressing these gaps will require a multi-pronged approach, including targeted training, diversification of board expertise, and a more robust focus on practical experience in sustainability initiatives. Without such efforts, Norwegian companies may find themselves falling behind in a rapidly changing global marketplace.

For the full report, please visit: Norwegian Boards: Facing an ESG Expertise Crunch (cbs.dk)

About the Authors:

Prof. Kristjan Jespersen is an Associate Professor in Sustainable Innovation and Entrepreneurship at the Copenhagen Business School (CBS). Kristjan is an Associate Professor at the Copenhagen Business School (CBS). As a primary area of focus, he studies the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance. He has a background in International Relations and Economics.

Walter Bachmann is an ESG Research Assistant at Nordic ESG Lab and a master’s student in Finance and Investments at Copenhagen Business School. He holds a bachelor’s degree in International Business Administration from Tallinn University of Technology, graduating with First Class Honors. Before joining Nordic ESG Lab, Walter worked as an M&A Analyst at LNP Corporate Finance, where he actively participated in deals from start to finish. He is proficient in developing complex financial and valuation models, as well as creating investor and client presentation materials. This year, Walter is focusing on sustainability by pursuing a minor in ESG at Copenhagen Business School. He is also actively involved in Oikos Copenhagen, a student-led initiative promoting collaboration for a sustainable future.

Naomi Villaruel holds a Bachelor of Commerce & Accounting degree from the University of Galway in Ireland where she completed an internship at KPMG Dublin. She furthered her expertise as an ESG & Business Development Associate at Nossa Data, an ESG Reporting SaaS startup in London, where she assisted companies with their non-financial reporting and disclosures. This year Naomi is commencing a Master’s degree in Environment & Resource Management specializing in Ecosystem Services & Biodiversity at Vrije University in Amsterdam.