Norway’s $1 Trillion Wealth Fund Urged to Extend Weapons Ban

(Bloomberg) -- Norway should add a number of restrictions to the kinds of weapons its $1 trillion wealth fund is allowed to invest in, a government-appointed commission said.

The Oslo-based fund shouldn’t be allowed to buy companies that develop lethal autonomous weapons or submarines and other vehicles that deliver nuclear weapons, the commission said in a report on Monday.

The panel also said a new rule was needed to ensure the fund’s investments don’t facilitate the sale of weapons that might be used in conflicts representing violations of humanitarian law.

The world’s biggest sovereign wealth fund has long invested according to strict ethical guidelines, which were first instituted in 2004. These include bans on certain weapons, tobacco and most exposures to coal. Investments also need to take human rights and climate clauses into account.

The Norwegian government decided last year to review the ethical guidelines after the fund’s value swelled to over $1 trillion. The minority coalition led by the Conservative Party will make proposals based on Monday’s report in an annual white paper due early next year.

‘Problematic’ Weapons

Existing rules already ban investments in companies that produce chemical agents, antipersonnel mines and nuclear weapons, among others. The commission said the rules should also include what are sometimes called “killer robots.”

“With autonomous weapons, the decision to apply the use of force is not directly subject to meaningful human control,” it said. The result is “erosion of accountability and is, in the committee’s view, problematic as a matter of principle.”

Norway should also expand its guidelines for the fund on corruption to include a broader set of serious economic crimes, the commission said.

Overall, it advised maintaining the current framework, whereby the fund’s Council of Ethics proposes excluding individual companies or placing them under observation, based on objective criteria. The central bank, which manages the fund, makes the final call.

Blacklist

The fund’s latest update to companies it blacklists singled out a number of coal and oil-sands producers. It keeps a public list of all firms that are banned or under observation.

The fund also issues a set of expectations to the companies it invests in ranging from executive pay to taxation and children’s rights, and it can make so-called risk-based divestments on its own initiative.

The changes proposed by the commission come after some critics voiced concerns that the fund is becoming an increasingly activist investor. Central bank Governor Oystein Olsen, who oversees the fund, has himself warned against meddling too much with the mandate, following a series of initiatives from politicians on issues ranging from climate change to gambling.

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