Concerns About Political Interference Trigger Review of World’s Biggest Sovereign Fund

(Bloomberg) -- Norway plans to review the ethical guidelines of the world’s biggest sovereign-wealth fund in a bid to prevent too much political interference, a key lawmaker from the governing Conservative Party said.

The Oslo-based fund, which is built on Norway’s oil and gas wealth, crossed the $1 trillion threshold back in 2017. As it’s swelled, politicians have grown more interested in its investments.

According to Henrik Asheim, the Conservative lawmaker who heads Parliament’s Finance Committee, the list of suggestions on the fund’s ethical guidelines has become too onerous and the process too undisciplined. He says he worries that the fund will end up being used as a political tool.

Norway’s new majority government is setting up an expert commission to go through the guidelines in order to address those concerns, Asheim said in a phone interview on Friday.

“We are worried that you could get a situation -- especially when the fund has gotten so big -- where you get these types of incoherent changes, which might not be sufficiently thought through,” he said. “You can always come up with something new that the oil fund should get out of. But maybe we should start in the other end and decide on some principles instead of continuously making new decisions.”

Norway’s decision to review the ethical guidelines comes after a series of political initiatives that have placed restrictions on the fund’s investment mandate. Most recently, a majority in Parliament led by the opposition Labor Party sought to get a ban on gambling stocks. That’s in addition to existing restrictions on investments in areas such as tobacco, coal and firms associated with human rights violations.

Asheim says the commission will explore whether there’s a need for some guidelines that make the process a little more structured. The upshot may be that the fund’s ethical investing guidelines become stricter, but the aim is to make the process less chaotic, he said.

The review may also look at the role of the independent Ethics Council, which proposes exclusions to the central bank, the formal manager of the fund. The bank is in open disagreement with the council on exclusions based on greenhouse-gas emissions.

Whatever the outcome, the fund’s mandate should still ultimately stem from Parliament and be subject to open political debate, Asheim said.

Norges Bank Investment Management, which runs the fund, declined to comment. The Finance Ministry, which will establish the commission’s mandate, said it would get back to the issue later, without commenting further.

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