The future of ESG is not about labels but about outcomes. That’s the key message from Christophe Girondel, deputy CEO of Nordic asset manager Nordea Asset Management, who says that despite growing media skepticism around ESG, demand from institutional clients remains strong and focused on long-term impact.
Nordea has secured nearly €5 billion in sustainability mandates from major institutional clients, reflecting not just marketing but an enduring commitment to climate and transition strategies, he shares. These clients are taking a measured view, looking beyond short-term market or political noise and focusing on their long-dated liabilities and decarbonisation goals.
“Clients like Ircantec and VBL are not driven by headlines; they have made strategic commitments to sustainability that span the next decade or more,” Girondel says. “There’s a distinction between short-term sentiment and long-term strategy. Our role is to meet clients where they are and adapt accordingly, whether it’s climate alignment, ESG integration or both.”
From exclusions to engagement
For Girondel, the evolution of ESG is not just about creating new funds or frameworks. It’s about how investors define sustainability and the tools they use to achieve it. He observes a shift in how clients are approaching the concept of ESG: “We’ve moved well beyond exclusions. While some clients still exclude controversial weapons or other red-line issues, the real focus now is on engagement, stewardship and understanding how companies manage the transition.”
This active approach is gaining traction across Nordea’s strategies. Girondel highlights the firm’s Climate Engagement Transition strategy, launched three years ago when client interest in transition-focused investing was still nascent. Since then, demand has grown, reflecting what he calls a “broader shift from a dogmatic approach to sustainability toward practical, real-world outcomes.”
Girondel emphasises that sustainability is no longer about “philanthropic efforts” but about recognising the economic logic of transition. “These are compelling investment cases. Companies providing solutions to climate challenges or adapting their business models to align with transition goals are increasingly well-positioned. This is where we see strong long-term fundamentals.”
“Exclusions are part of the picture, but they must be combined with a forward-looking approach that recognises how companies are adapting to a lower-carbon economy. Our clients expect us to go beyond screens and engage actively with companies to drive change,” adds Girondel.
The next wave of ESG growth
Looking ahead, Girondel sees transition-focused strategies as the next major wave of growth in sustainable investing. Transition plans in this context are defined as having a quantifiable and time-bound target to reduce greenhouse gas emissions. “We are only at the beginning of this shift, but it is where we see the most exciting potential. Transition is not just a necessity—it is also a significant source of alpha, as the market rewards companies that can address and benefit from structural changes.”
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While Europe remains the global leader in ESG, with a deep institutional and societal commitment to climate goals, Girondel acknowledges the picture is more mixed elsewhere. “In the US, demand is strongest on the West Coast and Northeast, but attitudes vary significantly within the country. Asia is also divided, with Japan showing strong leadership while others are earlier in their journey.”
Despite regional differences, Girondel is optimistic about the direction of travel. “More regions will catch up as the global conversation and regulation around climate continue to evolve. The opportunity set will only expand. As regulation tightens and the long-term profitability of companies becomes increasingly linked to how they manage climate risks, the need for transition strategies will only grow.”
Regulation and trust
The regulatory environment, Girondel admits, has added complexity to the ESG space. He is candid about the challenges posed by evolving frameworks like Sustainable Finance Disclosures Regulation (SFDR) but insists that the direction of travel is positive. “It’s important to remember that SFDR was never designed as a labelling regime, even if the market treated it that way. The intention was to improve transparency through disclosure. We support moves like the European Securities and Markets Authority (Esma) update on fund labelling, which we believe is a step towards greater clarity.”
In May 2024, Esma introduced new guidelines to curb greenwashing by regulating ESG-related terms in fund names. Effective November 21, 2024, the rules require that at least 80% of a fund’s assets align with stated ESG claims. Stricter criteria apply to terms like “sustainable” or “impact.” Existing funds have until May 2025 to comply.
“Transition is not just a necessity—it is also a significant source of alpha, as the market rewards companies that can address and benefit from structural changes.”
He acknowledges concerns about ESG becoming too broad or inconsistent across markets but views this as a reflection of the diverse cultural and political landscapes in which ESG operates. “ESG has always reflected local values and cultural nuances—take nuclear energy, for example. It’s a contentious issue in Germany but broadly accepted in France. A single global standard may sound appealing, but it’s probably unrealistic. That said, we are making progress and improvements like better fund naming conventions help build trust.”
Beyond the headlines
“Institutions are looking for strategies that align with a lower-carbon economy. They know that the profitability of companies is increasingly linked to how they manage climate risks and opportunities,” says Girondel.
Sustainability is evolving, as it should. “It’s not static. We’re moving into a phase where engagement, stewardship, and transition planning are central. The goal is real-world impact—and the economic rationale is stronger than ever,” he adds.
Girondel sees sustainability as a practical, long-term investment strategy that must adapt to changing realities—be it through engagement with companies, responding to regulatory shifts or building trust with clients. “This is not about dogma. It’s about making sure capital flows where it can have the greatest impact, both for clients and the world.”
