The Norwegian Government Pension Fund Global. Risk Based versus Ethical Investments

Vierteljahrshefte zur Wirtschaftsforschung, Vol. 88 (2019), Iss. 1: pp. 65–78

University of Oslo Faculty of Law Research Paper No. 2019-59

Posted: 25 Nov 2019 Last revised: 28 Nov 2019

See all articles by Heidi Rapp Nilsen

Heidi Rapp Nilsen

Norut Northern Research Institute

Beate Sjåfjell

University of Oslo - Faculty of Law

Benjamin J. Richardson

University of Tasmania - Faculty of Law

Date Written: November 21, 2019

Abstract

Access to finance is crucial if we are to achieve the fundamental transition of our time: securing a safe and just society operating within the planetary boundaries. In the era of global market capitalism and deregulation, Sovereign Wealth Funds (SWFs) offer one of the few public economic institutions capable of injecting ecological and social values into global markets. This article undertakes a case study of one of the world’s largest SWF, the Norwegian Government Pension Global (The Fund). The Fund is well-known for its Ethical Guidelines recommending exclusion of companies based on products and conduct as well as the Fund’s public statements when withdrawing from companies. Still, the ethical basis of overlapping consensus leads to responding to public opinion and media controversy when considering divestment, rather than undertaking due diligence beforehand.

In addition, and not well known, more firms have been excluded from the Fund based on the financial risk against the portfolio than based on the Ethical Guidelines. In this article we discuss the basis of both the Ethical Guidelines and of the financial risk management of the portfolio. Still, the majority of the Fund’s investments are on an unsustainable path of ‘business as usual’. A principal thesis of this article is the paradox that the more unsustainable ‘business as usual’ becomes, the importance of financial risk assessment increases and the relevance of the Ethical Guidelines decreases.

Suggested Citation

Nilsen, Heidi Rapp and Sjåfjell, Beate and Richardson, Benjamin J., The Norwegian Government Pension Fund Global. Risk Based versus Ethical Investments (November 21, 2019). Vierteljahrshefte zur Wirtschaftsforschung, Vol. 88 (2019), Iss. 1: pp. 65–78; University of Oslo Faculty of Law Research Paper No. 2019-59. Available at SSRN: https://ssrn.com/abstract=3491252

Heidi Rapp Nilsen (Contact Author)

Norut Northern Research Institute ( email )

P.o. box 6434
Tromsø, 9294
Norway

Beate Sjåfjell

University of Oslo - Faculty of Law ( email )

PO Box 6706 St Olavsplass
Oslo, 0130
Norway

HOME PAGE: http://www.jus.uio.no/ifp/english/people/aca/beatesj/

Benjamin J. Richardson

University of Tasmania - Faculty of Law ( email )

Private Bag 89
Hobart, Tasmania 7001
Australia

HOME PAGE: http://www.utas.edu.au/law

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