Can you achieve impact and superior returns?
An interview with Senior Portfolio Manager Tom Hestnes
For years, impact investing has carried a misconception of underperformance and compromise: do good but expect less returns. That narrative is changing, and Tom Hestnes is at the forefront of that change.
With a background in high-yield credit and corporate restructurings, Hestnes built a reputation as one of Norway’s high-performing credit portfolio managers. Over the past two years, he’s taken that expertise in a new direction: As portfolio manager at Norselab, he’s at the helm of what is now considered two top-performing impact funds in the Nordics, showing that meaningful impact and strong financial returns aren’t mutually exclusive.
At Norselab, impact doesn't mean limitations. When done right, it’s a competitive advantage.
We spoke with Hestnes about risk, returns, and why performance, not just purpose, may be what ultimately brings scale to the impact investing market.
Led by performance, not idealism
Despite common assumptions, Hestnes says his shift to impact was not driven by idealism, but by results.
“People often assume I had some kind of moral awakening. The truth is more pragmatic. I wanted to be early in a space few believed in, to prove that it’s possible to beat the market with a more selective, smarter strategy. That’s what drives me: to challenge assumptions and show results.”
The numbers speak for themselves. Since launching Norselab’s flagship fund, Meaningful Impact High Yield, in December 2022, it has delivered a return of 35.3%. The second fund, Real Estate Credit Opportunities, returned 31.48% in its first year.
Both funds are categorized as Article 9 under the EU’s Sustainable Finance Disclosure Regulation — the highest regulatory standard for sustainable investments — and apply an impact lens with a goal to contribute to the UN Sustainable Development Goals (SDGs).
“These results show us that not only are we delivering impact, we’re also outperforming the market.”
Impact doesn’t limit the playing field
According to Hestnes, the idea that impact investing limits the opportunity set is outdated.
“There’s a misconception that working with impact narrows the investment universe. That’s not how we see it. We don’t chase green labels; we back businesses solving overlooked problems that struggle to attract sufficient capital. That’s where the strategic advantage is.”
He also points to a common misunderstanding of what “green” investments really are.
“In Norway, people still associate green investing with solar and wind. But that’s far too narrow. We’ve also found a lot of value in sectors like food systems, real estate, and logistics — areas with a large potential for transformation."
Despite assumptions to the contrary, Hestnes argues that sustainable companies don’t get cheaper financing. In fact, many struggle to access funding altogether.
“They often fall between categories: too early for banks, too unproven for mainstream credit. That’s where we step in. We provide tailored capital with clear expectations, and we follow up.”
Many of our investors don’t necessarily come for impact. They come for the returns. That’s the point: If we can prove that sustainable investments deliver competitive returns, capital will follow.
Returns get investors on board, impact follows
Hestnes also points to a shift in the investor base as a signal that impact investing is maturing.
“Many of our investors didn’t necessarily come for the impact initially. They came for the returns. And that’s the point: If we can prove that sustainable investments deliver competitive returns, capital will follow”, Hestnes says and concludes:
“That’s how our funds help mature the market; As more investors see that sustainable investments can deliver competitive returns, the fear of impact strategies fades. That’s how we drive real change: by showing that this isn’t charity, it’s smart capital allocation.”
Through his work at Norselab Credit, Tom Hestnes is helping redefine what it means to invest sustainably. He is proving that with the right approach, impact and superior returns don’t just coexist; they reinforce each other.
This piece was originally published in our 2024 Meaningfulness Report.
This is a marketing communication. It does not constitute solicitation of, or an offer to participate in, any investment. Past performance is no guarantee of future returns. Returns can be negative as well as positive. An investment in any Norsleab fund carries certain risks, including the risk of loss of principal, and is suitable only for qualified, professional investors who fully understand the risks of such an investment. Please refer to the fund prospectus before making any final investment decisions.
