Investing in Sustainability or Feeding on Stranded Assets? The Norwegian Government Pension Fund Global

Abstract

We know that access to finance is crucial if we are to achieve the fundamental transition necessary to meet the grand challenge of our time: securing a safe and just operating space 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 paper undertakes a case study of the world’s largest SWF, the Norwegian Government Pension Global. The Norwegian Fund is well-known for its ethical profile. This includes exclusion of companies based on products (tobacco, certain weapons, and most recently also coal), and observation and potential exclusion based on conduct (including severe violations of human rights, severe environmental damage, gross corruption and other particularly severe violations of fundamental ethical norms), as well as the Fund’s public statements when withdrawing from companies based on conduct in the cases when its attempts at influencing the companies have failed. The principal thesis of the article is that a misleading dichotomy between ethics and economics has held the Norwegian Fund back from contributing to sustainability, leaving the majority of the Fund’s investments on an unsustainable path of ‘business as usual’. Although there are positive indications, major changes are necessary to realise the Fund’s potential to invest in sustainability.