The Legitimacy and Governance of Norway’s Sovereign Wealth Fund: The Ethics of Global Investment

35 Pages Posted: 18 Sep 2009 Last revised: 27 Feb 2010

Gordon L. Clark

Oxford University - Smith School of Enterprise and the Environment

Ashby H. B. Monk

Stanford University - Global Projects Center

Date Written: September 15, 2009

Abstract

The Norwegian Government Pension Fund-Global is one of the world’s largest sovereign wealth funds and is one of the most transparent institutions of its kind. It also has an explicit mission aimed at integrating long-term investment with a two-sided ethical commitment: to corporate engagement according to accepted global principles of best-practice corporate governance, and to ensuring that the fund is not associated with companies that pose a risk to global social and environmental justice. As such, the Norwegian fund has an ethical mandate — something remarkable when compared to other sovereign wealth funds. In this paper, we argue that this mission is best understood in terms of procedural rather than substantive justice. Our argument is sustained by reference to recent work on the nature of state authority and legitimacy in democratic societies, the logic of institutional governance, and the functional integration of decision-making. The paper focuses on the nature and significance of the recommendations from the advisory Council of Ethics and the exercise of powers related to standards of corporate governance. Implications are drawn for understanding the functional performance of the fund in the context of changing global financial markets.

Keywords: resource wealth, Norway, democracy, ethics, investment, sovereign wealth fund

JEL Classification: G23, G24, L12

Suggested Citation

Clark, Gordon L. and Monk, Ashby H. B., The Legitimacy and Governance of Norway’s Sovereign Wealth Fund: The Ethics of Global Investment (September 15, 2009). Available at SSRN: https://ssrn.com/abstract=1473973 or http://dx.doi.org/10.2139/ssrn.1473973

Gordon L. Clark (Contact Author)

Oxford University - Smith School of Enterprise and the Environment ( email )

South Parks Road
Oxford, OX1 3QY
United Kingdom
+44 1865 285197 (Phone)
+44 1865 285073 (Fax)

HOME PAGE: http://www.geog.ox.ac.uk/staff/glclark.html

Ashby H. B. Monk

Stanford University - Global Projects Center ( email )

United States

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