Norway’s oil fund needs to “catch up” with ethical norms

The committee tasked with reviewing the ethical framework of The Government Pension Fund of Norway, the world’s largest sovereign wealth fund, has proposed several changes to reflect “the evolution of ethical norms”.

In a document published by the Norwegian government, the Ethics Committee set out a series of proposals that should be implemented by the $1.15tn Government Pension Fund Global (GPFG) for observation and exclusion of assets and securities within its portfolios.

Among the proposed amendments to the guidelines is the introduction of a new conduct-based criterion for the sale of weapons to states involved in armed conflict where there is an “unacceptable risk” that they would be used “in military operations that constitute serious and systematic violations of international humanitarian law”.

Additionally, the committee proposed that lethal autonomous weapons (LAWs), or so-called killer robots be added to the list of excluded arms categories and suggested that certain types of submarine and other platforms used to deliver nuclear weapons be taken out of consideration for investment.

In its report, the committee also recommended that the corruption criterion be expanded to encompass other types of serious economic crime.

Professor Ola Mestad, chair of the Ethics Committee, said that, overall, the fund’s existing ethical framework had “worked well” but it was proposing some changes “in order to reflect the evolution of ethical norms over the past 15 years and to catch up with certain new issues that have emerged”.

Mestad added that in its report the committee had pointed to areas where particular attention was due, notably indigenous peoples’ rights and the use of surveillance technology.

Historically, the fund owed much of its size to Norway’s oil wealth, but it is now managed with the aim of securing lasting value creation and has ethical guidelines to prevent it from being invested in companies that cause or contribute to “serious violations of ethical norms”.

Back in May, GPFG announced it was excluding 11 companies from its portfolio on environmental grounds, citing their contribution to “unacceptable greenhouse gas emissions”.

Canadian Natural Resources, Suncor Energy and Imperial Oil were among the companies in which it sold stakes, following advice from its ethics council at Norges Bank Investment Management.

The Ethics Committee said it had based its latest proposals on the premise that the GPFG will remain a responsible investor and had presented its report to the Norwegian minister of finance Jan Tore Sanner.

Since 1998, the fund has generated an annual return of 6.1%.