Norway gov to scrap oil fund ethics committee

Norway's new government has proposed scrapping the independent ethics council which vets the investments of the country's the $860 billion oil fund, a move critics fear will weaken its ethical stance.

Norway gov to scrap oil fund ethics committee
Siv Jensen presenting a white paper on the oil fund. Photo: Erlend Aas / Scanpix NTB
Instead, the decision on which companies the fund should refuse to invest in on ethical grounds will be left to Norges Bank, the company responsible for managing the fund. 
"I think the changes will give better results and a more efficient and consistent use of available resources," Finance Minister Siv Jensen said as she presented a white paper to parliament on the fund's future. "At the same we will take steps to strengthen the legitimacy of the ethical side to the management." 
In its statement, the finance ministry said that the current ethical exclusion criteria would be "integrated" into the management mandate of Norges Bank. 
It also argues that the fund should up its mandate for investment in environmental companies from 20 billion to 30 billion kroner a year to 30 billion to 50 billion. 
The proposal has been criticized by both the Christian Democratic Party and the Liberal Democratic Party, both of whom have signed an agreement to support the government on key measures. 
"The Christian Democratic Party is not convinced that it is a good solution to eliminate the ethics council," the party's finance spokesman Hans Olav Syversen, told Norway's DN business newspaper. 
He was supported by Terje Breivik, the Liberals' finance spokesman, who argued that the committee's independence was "a very important thing to safeguard". 
Ola Mestad, the director of the Ethics Council told DN last month that the council would not be able to do its job if it was embedded in Norges Bank. 
"When the Council was established, the basic idea that it should be independent," he said. "If we are subject to Norges Bank, we will be just like other funds." 

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Norway oil fund loses 18 billion euros in first half of 2020

Norway's huge sovereign wealth fund, the world's biggest, lost 188 billion kroner (18 billion euros, $21 billion) in the first half of the year as the global economy reels from the Covid-19 pandemic, the central bank said Tuesday.

Norway oil fund loses 18 billion euros in first half of 2020
Unusually empty slopes and ski lifts in Hemsedal in April. Photo: AFP

The fund, in which the Norwegian state's oil revenues are invested, was hit by plummeting share prices, with stocks accounting for 69.6 percent of its investments.

Its share portfolio posted a negative return of 6.8 percent in the first six months of the year.

At the end of June, the fund was valued at 10.4 trillion kroner (989 billion euros), up from the 9.98 trillion kroner seen at the end of the first quarter.

“The year started with optimism, but the outlook of the equity market quickly turned when the coronavirus started to spread globally,” the fund's deputy chief executive, Trond Grande, said in a statement.

“However, the sharp stock market decline of the first quarter was limited by a massive monetary and financial policy response,” he added.

Real estate investments, which represent 2.8 percent of the portfolio, also posted a negative return, of 1.6 percent, while bond investments, which account for 27.6 percent of assets, posted a gain of 5.1 percent.

“Even though markets recovered well in the second quarter, we are still witnessing considerable uncertainty,” Grande said.

The fund is meanwhile still mired in controversy over the appointment of a new chief executive.

Nicolai Tangen, a billionaire who founded the AKO Capital hedge fund in London, is due to take over the fund on September 1st, replacing Yngve Slyngstad who is retiring.

But critics have complained about Tangen's possible conflicts of interest, as well as his use of tax havens.

The central bank has meanwhile been criticised for irregularities in the recruitment process.

As a result, some major political parties are opposed to Tangen's appointment, and it remains up in the air.

READ ALSO: Norway's oil fund loses 1.3 trillion kroner ($125bn) in coronavirus crash