Norway Government Pension Fund Global
| Norway | US$ 611 Billion |
|---|---|
| Established: 1990 Transparency Rating: 10 |
Origin: Oil Firm Investment Style: Index Entity Structure: Fund |
| Summary:The Government Pension Fund is a sovereign wealth fund where the surplus wealth produced by Norwegian petroleum income is held. The fund changed name in January 2006 from its previous name The Petroleum Fund of Norway. The fund is commonly referred to as The Petroleum Fund (Norwegian: Oljefondet). As of the valuation in October 2008, it is the largest pension fund in Europe and the second largest in the world with a value of NOK 2.09 billion, although it is not actually a pension fund as it derives its financial backing from oil profits and not pensioners. It is among the most transparent of the SWFs in its holdings & investments.
Background In 1969 oil was discovered in the North Sea. Later in 1990, the Storting passed the Government Petroleum Fund Act. In 1996, the first net transfer to the Fund. Invested as Norges Bank’s currency reserves. The petroleum fund is investing parts of the large surplus generated by the Norwegian petroleum sector, generated mainly from taxes of companies, but also payment for license to explore as well as the State’s Direct Financial Interest and dividends from the partial ownership of StatoilHydro. It is predicted that revenue from the petroleum sector is now in its peak period and will decline over the next decades. The Petroleum Fund was established in 1990 after a decision by the legislature assembly Stortinget to counter the effects of the forthcoming decline in income and to smooth out the disrupting effects of highly fluctuating oil prices. The wealth fund is administered by Norges Bank Investment Management (NBIM), a division of the Norwegian Central Bank. Strategies and Objectives The purpose of the Government Pension Fund-Global is to facilitate government savings necessary to meet the rapid rise in public pension expenditures in the coming years, and to support a long-term management of petroleum revenues. The fund invests a large portion of assets in fixed income and equities. Up to 5% has been allocated to international real estate. They currently do not invest in private equity. |
Corporate GovernanceThe Norwegian Ministry of Finance is responsible for the management of the Fund, and has delegated responsibility for the operational management of the Fund’s international assets to NBIM.
Investments have to be in line with the ethical guidelines based on sector and company behavior. The companies that the Fund invests in are closely monitored by a Council of Ethics. If companies are operating in conflict with the guidelines the Fund will consider withdrawal. Several companies have been excluded:
Source: Norges Bank Investment Management. Annual Report 2006). The guidelines restrict investment where there is a risk that a company is involved in activities that can contribute to violation of human rights, corruption, environmental damage or ‘other particularly serious violations of fundamental ethical norms.’ |
Sovereign Wealth Enterprises:
1. NBIM s.à r.l. – Luxembourg-based entity for real estate investments in mainland Europe.
