2008

Transfers of new capital to the Government Pension Fund – Global are determined largely by the amount of revenue from oil and gas production accruing to the Norwegian State. The accumulation of the fund can therefore be seen as a way of converting non-renewable natural resources into savings in global financial markets. The fund is currently in a phase where the allocation to equities is being increased in order to improve the long-term trade-off between risk and return. This is happening at a time when the relative value of petroleum resources and equity investments is more favourable for an oil producer than previously in the fund’s history.

The Government Pension Fund – Global’s equity portfolio is highly diversified across both regions and countries. From the time of the first equity investments in 1998, the benchmark index for equities (FTSE) consisted of the largest listed companies, while NBIM was also able to invest in smaller companies provided that they were listed.

Speech by Governor Svein Gjedrem at the conference “Commodities, the Economy and Money” in Calgary, Canada, 20 June 2008

Norges Bank's corporate governance strategy for 2007-2010 specifies six priority areas for the work in this field. Four of these concern fundamental ownership rights, while the other two concern social and environmental sustainability: child labour and and children’s rights in the value chains of multinational companies, and companies’ lobbying of national and supranational authorities on questions related to long-term environmental change. These priority areas and the strategy as a whole were described in a feature article in the 2006 Annual Report. This article looks in greater detail at the ideas behind the work on the two social and environmental priority areas, how we have approached this work, and how we plan to proceed.

It is ten years since Norges Bank set up NBIM to manage the Norwegian government's financial wealth abroad. An international investment management organisation working on commercial lines has been built up within the central bank. 178 employees from almost 20 countries operate from offices in Oslo, New York, London and Shanghai. The first equity trades were made on 20 January 1998, and NBIM has since invested new capital from the government of NOK 1 756 billion in global capital markets. Assets under management have grown from NOK 113 billion in January 1998 to NOK 2 261 billion at the end of 2007. This article outlines the most important experience and results from NBIM's first decade.