Norway’s parliament has voted to temporarily suspend ethical divestments by its sovereign wealth fund, valued at $2.1 trillion and the world’s largest. The decision, put forward by the minority Labour government, arrives amid growing international scrutiny regarding the fund’s investment ethics. The Norwegian sovereign wealth fund was established to manage Norway’s petroleum revenue, investing globally in stocks, bonds, and real estate. Its primary goal is to safeguard and grow the nation’s wealth for future generations.
The suspension follows criticism from the U.S. State Department over the fund’s divestment from Caterpillar due to the use of its equipment by Israeli authorities. Finance Minister Jens Stoltenberg highlighted the need to review the ethical guidelines, initially established in 2004, stating the world has changed considerably since their adoption. These guidelines prevent the fund from investing in companies involved in serious violations of human rights during war or conflict situations. An independent ethics body typically investigates potential breaches and recommends divestments, with the central bank’s board making the final decision.
The review and subsequent pause on divestments are expected to last approximately one year. While the proposal received support from the Conservatives, concerns were raised regarding the speed of the decision-making process. Stoltenberg defended the move as necessary to protect the fund, which finances a significant portion of Norway’s public spending and relies heavily on a small number of companies. He noted the fund’s substantial holdings in major tech companies such as Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta, and Broadcom, suggesting the current guidelines could potentially restrict investments in these global giants.
Political tensions surrounding the fund’s investments in Israel, particularly during the recent election campaign, also played a role. Some parties campaigned on divesting from companies involved in “Israel’s illegal warfare in Gaza.” The Socialist Left party criticised the government’s decision, suggesting it was motivated by fear of potential reactions from the United States. Separately, the fund indicated it would vote against Tesla CEO Elon Musk’s proposed compensation package, deeming it excessive.
