The Norwegian Government Pension Fund: Ethics Over Efficiency

Abstract

The Norwegian Government Pension Fund Global has an explicit mission to integrate long-term investment return objectives with an ambitious ethical commitment. This approach has drawn praise among Western policymakers. However, we contend that the ethical investment policy of the Norwegian Government Pension Fund Global presents a paradox, as the manner in which the country applies its ethical criteria to investment management transgresses best practice as we define it. As a result, we believe that Norway has chosen to discount functional efficiency in favor of exerting a “fundamental social perspective”. This may have unfavorable consequences in the long run. Nonetheless, we recognize the current approach is the source of the public and political legitimacy the Fund enjoys today.