Thursday 20th October 2016                 Change text size:

$820bn Norwegian oil fund plans investment expansion

Oslo parliament - Eric the Fish via Flickr

Norway’s sovereign wealth fund, worth $820 billion (£498 billion), is reportedly close to receiving approval for expansion into more asset classes in a bid to meet return targets.

The Government Pension Fund Global (GPF) is the world’s largest sovereign wealth fund, holding around 1% of the world’s shares. According to Bloomberg, the Norwegian government is considering investing in infrastructure as part of a review looking at how the fund is managed.

Prime minister Erna Solberg said, “The most important part is that we have security in our investment. We should do it conservatively and without much risk-taking. Infrastructure could fit perfectly into that, it gives us the same type of return.”

The governor of Norges Bank Oeystein Olsen has previously stated that it would be natural for the fund to enter new asset classes.

GPF has been strongly criticised for its investment in oil and coal companies. The opposition Labour party urged the government in November to divest from coal companies and build on commitments to avoid investment in unethical companies.

The comments followed the coalition government pledging to invest some of the GPF money sustainably. However, Hilde Singsaas, the Norwegian finance secretary, said the fund would not divest from oil and gas companies.

Rising oil and gas prices meant that everyone in Norway became a theoretical crown millionaire this week. A preliminary counter for the fund increased to 5.11 trillion crowns (£500 billion), marginally more than a million times higher than population estimates.

A report commissioned by the Norwegian government suggested that the GPF’s ethics council should integrate into Norges Bank Investment Management (NBIM). The fund is currently managed by NBIM and integration would improve efficiency and speed-up the decision making progress, the report said.

Further reading:

Norway central bank could become responsible for $800bn oil fund’s ethics

$800bn Norwegian oil fund under pressure to divest from coal

$760bn Norwegian oil fund considering boosting sustainable investments

We will not ditch oil and gas, says Norway finance ministry after criticism of $750bn fund

Major flaws in $760bn oil fund’s approach to climate change and sustainable investment

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