Norway has been able to amass tremendous financial wealth from petroleum revenue over the past fifteen years. The wealth fund commands attention from policymakers, asset managers and the citizens of Norway. Thus, Norway’s Government Pension Fund Global (GPFG), the ex-Norway part of oil-derived assets, wields significant influence when it comes to corporate governance and investment policy. For example, allocation to renewable and environmental strategies gained further traction in 2009, amid pressure from Norwegian politicians. During that period, Norway’s sovereign fund awarded mandates to a number of external managers in environmental-related mandates. By 2014, Norges Bank Investment Management (NBIM) established their first portfolio dedicated to green bonds, in which the reference portfolio is based on a sub-segment of the Barclays MSCI Green Bond Indices. In parallel, NBIM has excluded a number of companies from its portfolio based on recommendations from its Council on Ethics which was established by Norwegian royal decree in November 2004. Divested companies were in violation of areas such as excessive greenhouse gas emissions (cement companies, oil sands firms, and coal-fired plants), deforestation, water issues and corruption. These inclusionary and exclusionary investment policies, so far, have had a negligible impact on the fund’s growth and performance, while signaling to the capital markets their beliefs on how companies should be properly managed.
Norway’s wealth assets are at an inflection point.
Political Parties Have Different Dreams of Norway’s Sovereign Wealth Assets
With that being said, there has been talk by Norwegian politicians of dividing up Norway’s massive pile of sovereign wealth into mission-driven funds. Norway’s ruling Conservative Party publicly agreed to this idea. Norway’s Green Party has been able to sway the country’s parliament to force the wealth fund to divest from coal investments, while advocating the wealth fund partake in large-scale renewable investments. There is also talk of more investment into infrastructure. The biggest news driver is Norway’s own economy, in which the key policy rate was lowered from 0.75% to 0.5%, while the Norges Bank Governor warned the fund will withdraw some assets.
Dag Dyrdal from Montalban AS penned a paper in Internasjonal Politikk titled, “Tverrpolitisk pensjonskasse eller aktivt politisk verktøy?” It essentially translates in English to Bi-partisan Pension Fund or Active Political Tool? Dyrdal in his paper praises past Norwegian politicians on keeping up with the fiscal rule, even during tough times in 2007 and 2008. Dyrdal concludes that the wealth fund has achieved success based on broad consensus from Norway’s parliament, but also limited politicization of the wealth fund, at home and abroad.
Norway’s wealth assets are at an inflection point. With increasing external pressures from prolonged low oil prices, currency turmoil, and a weakened domestic economy, Norway will have to decide how much capital from the fund they will want to tap to achieve their goals.
Singapore’s GIC Private Limited named Dr Tony Tan Keng Yam (Tony Tan) as director and special advisor to the wealth fund, effective January 1, 2018. Tan was the former Deputy Chairman and Executive Director of GIC from September 2005 to June 2011. In 2011, He went on to serve as the 7th President of Singapore until August 31, 2017.
In a press release, Lim Chow Kiat, Chief Executive Officer of GIC, said, “As Special Advisor, Dr Tan will provide much value in broadening and strengthening GIC’s network of senior statesmen and leaders of corporations and institutions who may be constructive in advancing the business and interests of GIC. We will also benefit from his extensive knowledge and perspectives on global matters.”
New York-based buyout firm Lindsay Goldberg LLC has announced that Former U.S. Treasury Secretary Jacob J. Lew will join the company as a partner focusing on investments across sectors, institutional relationships, and firm management, according to an announcement released on Monday, November 20. Lindsay Goldberg is a private equity firm co-founded by Alan E. Goldberg and Robert D. Lindsey, both veterans of Morgan Stanley in which they worked in the Transaction Development Group.
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The San Diego City Employees’ Retirement System plans to reduce annual commitments to private equity and infrastructure down to US$ 75 million for fiscal year 2018. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
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