In 1969, oil was discovered in a Norwegian offshore field in the North Sea, marking the beginning of Norway’s oil wealth. When oil production began, there was intense discussion on how best to manage the huge but volatile revenue windfall. A key question was how to create wealth that would outlive the depletion of the oil field for future generations. The result was the founding, in 1990, of the country’s SWF, the Government Pension Fund Global (GPFG), or The Oil Fund, as it is commonly called.

With a fund size of slightly more than US$1 trillion, the GPFG is now considered the largest SWF in the world. The GPFG holds only overseas investments and invests broadly across countries. It avoids investing locally to prevent the Norwegian economy from over-heating. The range of GPFG’s investments is impressive. As at end-2018, it held the stocks of more than 9,000 companies and was invested in 77 countries. Except for ethical considerations, discussed below, the GPFG invests on a commercial basis

A distinctive feature of the GPFG is its strong ethical standards. Although it seeks returns, GPFG’s investments must conform to rules set by a Council of Ethics. For example, the Council’s guidelines bar the GPFG from investing in companies that produce products or services that degrade the environment or which are socially harmful. Blacklisted companies include tobacco companies and coal producers. GPFG is also active in promoting good governance standards in the companies it invests in. It does this by casting its shareholder voting rights on governance and sustainability issues at the Annual General Meetings of companies and on proposals tabled by shareholders.