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Management mandate

This translation is for information purposes only. Legal authenticity remains with the original Norwegian version, "Mandat for forvaltningen av Statens pensjonsfond utland", which can be found on lovdata.no.

Legal basis: Adopted by the Ministry of Finance on 8 November 2010 pursuant to section 2, second paragraph, and section 7 of Act no. 123 of 21 December 2005 relating to the Government Pension Fund.

Amendments: Amended by decision no. 1792 of 21 Dec. 2010, no. 901 of 5 Sept. 2011, no. 689 of 27 June 2012, no. 943 of 4 Oct. 2012, no. 1338 of 18 Dec. 2012, no. 383 of 15 April 2013, no. 401 of 25 March 2014, no. 1783 of 18 Dec. 2014, no. 15 of 7 Jan. 2015, no. 773 of 26 June 2015, no. 1367 of 30 Nov. 2015, no. 78 of 1 Feb. 2016, no. 1036 of 5 Sept. 2016, no. 1164 of 30 Sept. 2016, no. 1781 of 20 Dec. 2016, no. 1061 of 29 June 2017.

Chapter 1. General provisions

Section 1-1 Norges Bank’s management assignment

The Ministry places the Government Pension Fund Global (GPFG) in the form of a Norwegian krone deposit with Norges Bank (the Bank) in accordance with Act no. 123 of 21 December 2005 on the Government Pension Fund, section 2, second paragraph. The Bank shall manage this deposit in accordance with the provisions of this mandate and provisions issued pursuant to sections 8-1 and 8-2, third paragraph.

Section 1-2 Investment of the capital

(1) The Ministry’s krone deposit shall be placed in a separate account in the Bank. The Bank shall invest this krone deposit in its own name in a portfolio of financial instruments, real estate, cash deposits and other assets and financial liabilities that the Bank manages in accordance with this mandate (the investment portfolio), cf. chapter 3.

(2) The value of the krone account shall be equivalent to the net book value of the investment portfolio. The book return of the investment portfolio less the Bank’s management costs and adjusted in accordance with the prevailing accounting regulations for the Bank shall be added to the krone account.

(3) The Bank shall make investment decisions and exercise ownership rights independently of the Ministry.

Section 1-3 The management objective

(1) The Bank shall seek to achieve the highest possible return after costs measured in the investment portfolio’s currency basket, see section 4-2, first paragraph, and within the applicable management framework.

(2) The Fund shall not be invested in companies excluded pursuant to the provisions in the Guidelines for observation and exclusion from the GPFG.

(3) The Bank shall integrate its responsible management efforts into the management of the GPFG, cf. chapter 2. A good long-term return is considered dependent on sustainable development in economic, environmental and social terms, as well as well-functioning, legitimate and efficient markets.

Section 1-4 The Bank’s advisory duty and right to express an opinion

(1) The Bank shall advise the Ministry on the investment strategy for the investment portfolio. Advice may be provided on the initiative of the Bank or on request from the Ministry.

(2) The Bank shall advise the Ministry on the need for changes in the mandate. Such advice may be provided on the initiative of the Bank or on request from the Ministry.

(3) The Bank shall have the opportunity to express its opinion before significant changes are introduced in the mandate and shall be given notice in reasonable time of the implementation of the changes.

Section 1-5 Strategic benchmark index

(1) The strategic benchmark index for the investment portfolio consists of:

a) The benchmark index for the equity portfolio, cf. section 3-3
b) The benchmark index for the bond portfolio, cf. section 3-2

(2) The benchmark index for the equity portfolio constitutes 62.5 per cent of the strategic benchmark index. The benchmark index for the bond portfolio constitutes 37.5 per cent of the strategic benchmark index.

3) The Ministry establishes a plan for increase of the equity share in the strategic benchmark to 70 percent.

Section 1-6 Actual benchmark index

(1) The share of equities and bonds in the actual benchmark index is calculated daily and fluctuates with the return on the benchmark indices for the equity and bond portfolios.

(2) The value of the actual benchmark index shall be equivalent to the total market value of the investment portfolio at each month-end.

(3) Transfers to and from the krone account, cf. section 1-2, first paragraph, will normally take place on the last trading day of each month. The Ministry shall specify the transfer amount in Norwegian kroner by the fourth-to-last trading day of the month. Transfers do not affect the ratio between equities and bonds in the actual benchmark index. The Bank shall inform the Ministry on the second trading day of the subsequent month as to the composition of the new actual benchmark index.

(4) If the equity share in the actual benchmark index exceeds 74 percent, or is more than four percentage points lower than the weight in the strategic benchmark index, rebalancing shall take place on the last trading day of the following month. The Ministry sets more detailed provisions on the rebalancing of the actual benchmark index.

(5) The Bank shall inform the Ministry immediately if the criteria for rebalancing in the fourth paragraph are met. The Bank shall report on the implementation of rebalancing, including estimated costs.

Section 1-7 Strategic plan for the Bank’s management of the investment portfolio

(1) The Executive Board shall have a strategic plan for the execution of its management assignment. This plan shall be updated regularly and in the event of significant changes in the management.

(2) The Executive Board shall regularly evaluate the extent to which the goals in the strategic plan have been achieved.

Section 1-8 External managers and service providers (outsourcing)

(1) The Bank may use external managers and outsource operational functions, cf. section 5 of regulation no. 1630 of 17 December 2009 on risk management and internal control in Norges Bank.

(2) The Bank shall have guidelines for when outsourcing may be used.

(3) The fee structure in agreements with external managers shall be designed to reflect the objectives for the management of the investment portfolio, taking into account the time horizon of the relevant investment strategies. The individual management agreements on performance-based fees shall be structured so that a major proportion of the positive excess return is retained, including provisions for caps on fees.

Chapter 2. Responsible management

Section 2-1 Responsible management activities

The Bank shall seek to establish a chain of measures as part of its responsible management activities.

Section 2-2 Responsible management principles

(1) The Bank shall establish a broad set of principles for the responsible management of the investment portfolio.

(2) In designing the principles pursuant to the first paragraph, the Bank shall emphasise the long-term horizon for the management of the investment portfolio and that the investment portfolio shall be broadly diversified across the markets included in the investment universe.

(3) The principles shall be based on the considerations of good corporate governance and environmental and social conditions in the investment management, in accordance with internationally recognised principles and standards such as the UN Global Compact, the OECD’s Principles of Corporate Governance and the OECD’s Guidelines for Multinational Enterprises.

(4) The principles and the use of instruments to support them shall be published, cf. section 2-1 and section 6-2, third paragraph, letter h.

(5) In its management of the unlisted real estate portfolio, the Bank shall, within the environmental field, consider, among other matters, energy efficiency, water consumption and waste management.

Section 2-3 Contribution to research and development relating to international standards for responsible management

(1) The Bank shall contribute to research within responsible management with the aim of developing greater knowledge of matters relevant to the investment portfolio’s risk and return in the long term.

(2) The Bank shall actively contribute to the development of relevant international standards in the area of responsible management.

Section 2-4 Environment-related investments

The Bank shall establish environment-related mandates within the limits defined in section 3-4. The market value of the environment-related investments shall normally be in the range of NOK 30–60 billion.

Section 2-5 Decisions on exclusion and observation

The Bank shall make decisions on the observation or exclusion of companies, and on the revocation of such decisions, in accordance with the Guidelines for observation and exclusion from the GPFG. The Bank shall inform the Ministry about decisions on exclusion of companies and the revocation of such decisions, cf. section 3-1, third paragraph.

Chapter 3. Management of the investment portfolio

Section 3-1 The investment universe

(1) The Bank may invest the investment portfolio in financial instruments, real estate and cash deposits that are approved in accordance with section 4-10, but with the following restrictions:

a) The equity portfolio may be invested in equities listed on a regulated and recognised market place, listed securities that are equivalent to listed equities, depository receipts for such equities, and unlisted companies where the board has expressed an intention to seek a listing on a regulated or recognised market place.

b) The bond portfolio may be invested in tradable bonds and other tradable debt instruments, and depository receipts for such bonds.

c) The unlisted real estate portfolio may be invested in real estate or in equity and interest-bearing instruments issued by non-listed companies, fund structures and other legal entities whose primary business is the acquisition, development and management or financing of real estate. These investments may be made through Norwegian or other legal entities. Real estate means rights to land and any buildings thereon.

d) Financial derivatives and fund units only when naturally linked to investments in the equity, bond and unlisted real estate portfolios.

e) Other financial instruments only when passed to the investment portfolio as a result of corporate actions.

(2) The Bank may not invest the investment portfolio in:

a) Securities issued by Norwegian enterprises, securities denominated in Norwegian kroner, real estate located in Norway or in real estate companies, real estate funds or similar structures where the primary purpose is to invest in Norway. The same applies to covered bonds secured against assets in Norway. Norwegian enterprises mean enterprises whose head office is in Norway.

b) Securities that the Bank has excluded from the investment portfolio, cf. Guidelines on observation and exclusion from the GPFG section 2-5.

c) Fixed-income instruments issued by governments or government-linked entities in the exceptional cases where the Ministry has barred such investments based on particularly large-scale UN sanctions or other international initiatives of a particularly large scale that are aimed at a specific country and where Norway supports the initiatives.

d) Unlisted companies and fund structures in a country with which Norway does not have a tax treaty or in a country from which Norway cannot request information relating to tax matters in accordance with other international agreements.

e) Unlisted infrastructure such as roads, railways, harbours, airports and other basic infrastructure.

(3) The Bank shall adopt guidelines on the exclusion and reinclusion of companies in the investment universe and benchmark index in accordance with the Guidelines for observation and exclusion from the GPFG, cf. section 2-5. The Ministry sets dates for the exclusion and reinclusion of securities in the benchmark index.

Section 3-2 Benchmark index for the bond portfolio

(1) The benchmark index for the bond portfolio has fixed weights with monthly rebalancing to the following sub-indices:

a) Government bonds: 70 per cent
b) Corporate bonds: 30 per cent

(2) The government bond sub-index of the benchmark index for the bond portfolio comprises:

a) all securities included in the Bloomberg Barclays Global Inflation-Linked (Series-L) Bond Index

b) all securities included in the Bloomberg Barclays Global Treasury GDP Weighted by Country Index

c) all securities included in the supranational sub-segment (of the government-related segment) of the Bloomberg Barclays Global Aggregate Bond Index.

(3) Bonds issued by supranational organisations are allocated to countries in the government bond sub-index based on the underlying currency denomination. Bonds issued by supranational organisations in euros are allocated to the category “Supranationals (EUR)”.

(4) Country weights in the government bond sub-index are calculated on the basis of the rules for the Bloomberg Barclays Global Treasury GDP Weighted by Country Bond Index. GDP weights shall subsequently be adjusted in accordance with the following weighting factors:

a) Chile, Hong Kong and Russia shall be assigned a factor of 0.25
b) Other countries shall be assigned a factor of 1.

All weights in the government bond sub-index shall be standardised (sum of all weights equals 1). In addition, special provisions apply to countries in the eurozone as described in the fifth paragraph.

(5) Country weights shall be adjusted for the allocation to “Supranationals (EUR)” in accordance with the following rules:

a) Proportion of “Supranationals (EUR)” in the eurozone = X

b) Allocation to “Supranationals (EUR)” = X * total GDP weight for countries in the eurozone based on weights calculated using the method specified in the fourth paragraph.

c) For all countries in the eurozone: Country weight = (1-X)*GDP weight for the country based on weights calculated using the method specified in the fourth paragraph.

X is determined for a period of twelve months effective from the index provider’s annual reset of GDP weights as the relationship between the market value of “Supranationals (EUR)” and the market value of all euro-denominated bonds included in the government bond sub-index. The market values are calculated as at the end of October, one month prior to the index provider’s annual reset of GDP weights, based on index data published by Bloomberg L.P.

(6) Within each country in the government bond sub-index, the bonds included are weighted using the methodology for the Bloomberg Barclays Global Treasury GDP Weighted by Country Bond Index.

(7) The corporate bond sub-index of the benchmark index for the bond portfolio comprises all securities included in the corporate sub-sector and the covered bond sub-segment (of the securitised segment) of the Bloomberg Barclays Global Aggregate Bond Index. The corporate bond sub-index is restricted to the following approved currencies: USD, CAD, EUR, GBP, SEK, DKK and CHF.

(8) Within the corporate bond sub-index, the bonds are weighted using the methodology for the Bloomberg Barclays Global Aggregate Bond Index.

(9) Securities denominated in Norwegian kroner or classified by Bloomberg L.P. as issued in Norway shall be excluded from the benchmark index for the bond portfolio. The same applies to securities issued by companies excluded by the Bank pursuant to the Guidelines for observation and exclusion from the GPFG. When bonds are excluded from the benchmark index, the remaining bonds in the sub-index in question shall be weighted up. When a company is reincluded under the aforementioned guidelines, the securities shall be reincluded in the benchmark index, cf. section 3-1, third paragraph.

Section 3-3 Benchmark index for the equity portfolio

(1) The benchmark index for the equity portfolio is composed on the basis of the FTSE
Global All Cap Index.

(2) The equities in the benchmark index are assigned the following factors based on their
country of origin:

a) European developed markets excluding Norway: 2.5
b) USA and Canada: 1
c) Other developed markets: 1.5
d) Emerging markets: 1.5

The allocation to countries and regions and the distinction between developed and emerging markets are based on the FTSE Global All Cap Index.

(3) Each country is included in the benchmark index with a weight based on the following
formula:

Market cap formula

where i represents the countries with the factor in question, cf. section 3-3, second paragraph. The calculation of market capitalisation is based on the methodology for the FTSE Global All Cap Index and adjusted for free float.

(4) The benchmark index is adjusted for the Bank’s tax position.

(5) Securities issued by companies excluded by the Bank pursuant to the Guidelines for observation and exclusion from the GPFG shall not be included in the benchmark index for the equity portfolio. When a company is reincluded under the aforementioned guidelines, the securities shall be reincluded in the benchmark index, cf. section 3-1, third paragraph.

Section 3-4 Management restrictions

(1) The equity portfolio, cf. section 3-1, first paragraph, letter a, shall constitute between 50 and 80 per cent of the investment portfolio.

(2) The bond portfolio, cf. section 3-1, first paragraph, letter b, shall constitute between 20 and 50 per cent of the investment portfolio.

(3) The unlisted real estate portfolio, cf. section 3-1, first paragraph, letter c, may constitute up to 7 per cent of the investment portfolio.

(4) Net market value shall be used to calculate the respective shares in the first to third paragraphs. In such calculations, derivatives shall be depicted with the underlying economic exposure.

(5) The Bank shall organise the management with the aim that the expected annualised standard deviation for the relative return between the investment portfolio and the actual benchmark index (expected tracking error) does not exceed 1.25 percentage points, cf. section 4-3, second paragraph.

(6) The equity and bond portfolios shall be composed in such a way that the expected relative return is exposed to several systematic risk factors.

(7) The Bank shall seek to take account of differences in fiscal strength between countries in the composition of government bond investments.

(8) The Bank shall organise the management with the aim that high-yield bonds (credit rating lower than investment grade) do not exceed 5 per cent of the market value of the bond portfolio.

(9) A credit rating is required for investments in debt instruments. All internal credit rating assessments shall be documented.

(10) The equity portfolio may not be invested in more than 10 per cent of the voting shares in an individual company. Ownership in listed and unlisted real estate companies is exempt from this rule.

(11) The unlisted real estate portfolio shall be well diversified geographically, across sectors and individual properties.

(12) Leverage may be used with a view to performing the management assignment in an effective manner, but not with a view to increasing the investment portfolio’s exposure to risky assets in the equity and bond portfolios. Leverage may also be used in fund structures and by other legal entities with the aim of performing the management assignment in an effective manner, but such leverage may not be with a view to increasing the investment portfolio’s exposure to risky assets.

(13) Reinvestment of cash collateral shall not take place with a view to increasing the investment portfolio’s financial exposure to risky assets.

(14) Short selling is only permitted if the Bank has access to the securities through an established borrowing arrangement.

Section 3-5 Management restrictions to be set by the Executive Board

(1) The Executive Board shall set supplementary limits for risks that, based on experience, are not captured well by expected tracking error, including:

a) Limits for the minimum overlap between the equity and bond portfolios and the corresponding actual benchmark indices

b) Credit risk limits at the individual issuer level and aggregated for the investment portfolio

c) Liquidity risk limits

d) Counterparty risk limits

e) Leverage limits

f) Limits for the reinvestment of cash collateral received

g) Limits for securities borrowing

h) A limit for large expected negative deviations between the return on the investment portfolio and the actual benchmark index (expected extreme deviation risk).

(2) The Executive Board shall also limit risk in the unlisted real estate portfolio by setting restrictions for:

a) investments in countries
b) investments in sectors
c) investments in emerging markets
d) investments in real estate under development
e) total debt ratio and the maximum debt ratio for individual investments

(3) The Executive Board shall establish a limit for how large a part of the voting shares in a single, listed real estate company the Fund may own.

(4) The Executive Board shall establish a limit for how large a part of the investment portfolio a single external manager may manage.

(5) The limits stated in the first to fourth paragraphs and subsequent changes to these limits shall be presented to the Ministry at least four weeks prior to their planned implementation, unless special circumstances indicate a shorter time limit.

Chapter 4. Valuation, performance measurement, and risk management, measurement and control

Section 4-1 Introductory provisions

(1) The Bank shall establish principles for valuation, performance measurement, and risk management, measurement and control that, as a minimum, adhere to internationally recognised standards and methods. The Bank shall evaluate its work and competence related to risk management and internal control at least once a year, cf. section 3, subsection 7 of regulation no. 1630 of 17 December 2009 on risk management and internal control in Norges Bank.

(2) The Bank shall have routines for reporting risk and exposure in the areas covered in this chapter. The measurement methods shall be complementary.

Section 4-2 Valuation and measurement of return

(1) The return of the investment portfolio shall be measured in the currency composition of the actual benchmark index (the investment portfolio’s currency basket), cf. section 1-6. For the unlisted real estate portfolio, the return shall also be measured in the currency composition of the actual unlisted real estate portfolio.

(2) The net return of the unlisted real estate portfolio shall be calculated after deduction of all costs, such as operating, transaction, management and tax costs.

(3) The rate of return calculations shall be designed in compliance with the Global Investment Performance Standards (GIPS) methodology.

(4) The Bank shall establish principles for valuation and return measurement for the financial instruments included in the portfolio.

(5) The method used to establish the value of financial instruments shall be verifiable and shall indicate with reasonable assurance the true value of the investment portfolio at the time of measurement.

(6) At least once a year the Bank shall obtain an external, independent valuation of the unlisted real estate investments, preferably as at 31 December.

Section 4-3 Measurement and management of market risk

(1) The Bank shall establish principles for the measurement and management of market risk, including relevant sources of systematic risk, cf. sections 3-4 and 3-5. The measurements shall strive to capture all relevant market risk associated with the financial instruments in use. The risk shall be estimated by means of several different methods. Stress tests shall be performed, based, for example, on historical events and scenarios for the future development of systematic risk factors.

(2) The Bank determines a method for the calculation of expected tracking error that must be approved by the Ministry.

(3) Analysis of extreme event risk shall be an integral part of the investment portfolio’s risk management.

Section 4-4 Measurement and management of credit risk

The Bank shall establish principles for measurement and management of credit risk, cf. section 3-5. Measurements of credit risk shall strive to capture all relevant credit risk linked to the financial instruments in use.

Section 4-5 Measurement and management of counterparty exposure

(1) The Bank shall establish principles for measurement and management of counterparty exposure, cf. section 3-5.

(2) The Bank shall have satisfactory routines and systems for selecting and evaluating counterparties. The Bank shall establish upper limits for exposure, minimum requirements for credit rating, and standards for provision of collateral, collateral management and netting arrangements. Overall exposure to counterparties shall be measured using internationally recognised methods.

Section 4-6 Measurement and management of leverage

The Bank shall establish principles for measurement and management of leverage in the investment portfolio, cf. section 3-5. The principles shall cover implicit leverage achieved through the use of derivatives and reinvestment of cash provided as collateral in connection with securities lending or repurchase agreements.

Section 4-7 Securities lending and borrowing and short selling

The Bank shall establish guidelines for securities lending and borrowing, and for short selling of securities.

Section 4-8 Reinvestment of cash collateral received

The Bank shall establish guidelines for reinvestment of cash collateral received, cf. section 3-5.

Section 4-9 Measurement and management of operational risk

(1) The Bank shall define in more detail what is meant by the term operational risk.

(2) Operational risk factors shall be identified, assessed in terms of probability and impact, monitored and managed.

Section 4-10 Approval of instruments and due diligence review

(1) Before investments are made, the Bank shall approve all the financial instruments that may be used in the management and all markets the Fund may be invested in.

(2) The Bank’s approval shall depend on whether an instrument contributes to effective execution of the management assignment and whether the Bank can ensure comprehensive management, control and monitoring of all the relevant investment and operational risks.

(3) The approval shall be documented.

(4) The Bank shall establish guidelines that ensure a thorough due diligence review ahead of each individual investment in the unlisted real estate portfolio. The review shall include assessments of the various risk aspects connected to the investment, including market risk, liquidity risk, credit risk, counterparty risk, operational risk, legal, tax and any technical and environmental risk. The review shall be documented.

Chapter 5. Management costs and remuneration system

Section 5-1 Limit for management costs

(1) By 1 December each year, the Bank shall send the Ministry a substantiated proposal for a limit on the costs for the management of the investment portfolio based on estimates of the management costs for the following year.

(2) The Ministry will approve a limit for the management costs as a percentage of the assets under management. The Bank will be reimbursed for actual costs within the approved limit only. Costs in excess of the approved limit will not be covered. The part of external managers’ fees that is based on achieved excess return will be covered beyond the approved limit for management costs.

(3) The total actual costs may be drawn directly from the Ministry’s separate account before the net return is transferred to the krone account, cf. section 1-2, second paragraph. The Bank shall submit its calculation of the total management costs as early as possible, no later than one week prior to the approval of the statement of accounts.

Section 5-2 Guidelines and limits for a remuneration system

(1) The Executive Board shall establish guidelines and limits for a remuneration system. The remuneration system shall include special provisions for executives, for other employees and employee representatives with assignments of significance for the Bank’s risk exposure and for other employees and employee representatives with corresponding remuneration, and for other employees and employee representatives with control tasks.

(2) The remuneration system shall contribute to the promotion of and create incentives for good management and control of the risks involved in management, counteract excessive risk exposure and help prevent conflicts of interest.

(3) Regulation no. 1507 of 1 December 2010 with subsequent amendments regarding remuneration schemes in financial institutions, investment firms and management companies for securities funds applies, with necessary adaptations.

Chapter 6. Public reporting

Section 6-1 Objective

(1) There shall be the greatest possible transparency about the management within the limits defined by responsible execution of the management assignment.

(2) The public reporting shall provide a true and comprehensive overview of how the Bank executes the management assignment, including the choices and priorities the Bank makes, the results that are achieved, and how the limits provided in this mandate are utilised.

Section 6-2 Reporting requirements

(1) The Bank shall report regularly and at least every three years on its choice of investment strategies for the respective management of the equity, bond and real estate portfolios, adopted by the Executive Board (strategy reporting), cf. section 1-7. A special account shall be given of:

a) The overriding principles for the choice of strategies, the risk and return characteristics of the strategies, and how the strategies aim to exploit the Fund’s special characteristics and the Bank’s advantages in the investment management.

b) Different investment strategies within the respective management of equities and bonds that can affect market risk and extreme deviation risk in the investment portfolio as a whole, and for the equity and bond portfolios separately.

c) Framework for the management and control of risk.

d) The organisation of the investment management, including use of subsidiaries and external managers.

(2) Each quarter the Bank shall report on and provide a special account of (quarterly reporting):

a) The change in value, results and risk in the investment portfolio as a whole, in the equity, bond and the unlisted real estate portfolios separately, and in the associated benchmark indices.

b) The composition of the excess return for the investment portfolio and within the equity portfolio and the bond portfolio respectively.

c) Utilisation of the limits provided in this mandate.

The quarterly reporting shall also contain extracts from the Bank’s accounts concerning the management of the investment portfolio, adopted in accordance with the current accounting regulations for the Bank.

(3) In addition to the requirements in section 6-2, second paragraph, each year the Bank shall report on and provide a special account of the following (annual reporting):

a) The results of real estate management and the different investment strategies within the management of equities and bonds respectively, including the share of the excess return, utilisation of the limits for tracking error, extreme deviation risk and management costs. Different investment strategies mean investment strategies that are emphasised in the utilisation of the individual limits, such as the limits for tracking error, extreme deviation risk and management costs.

b) The Executive Board's assessment of the results.

c) The relationship between return and risk in the investment portfolio as a whole, in the equity and bond portfolios separately, and in the associated benchmark indices. The Bank shall use several methods and measures to report risk-adjusted return.

d) Revenue from securities lending, internal and external management costs, tax costs and estimated transaction costs for the investment portfolio as a whole and for the equity, bond and the unlisted real estate portfolios expressed as a share of the assets under management.

e) The management of the unlisted real estate portfolio, including an assessment of the performance compared with a broad set of return objectives.

f) Environment-related investments, cf. section 2-4. The account of the environmental investments shall among other things include the scope, strategy, asset type and a description and assessment of how the intentions for these investments are being met.

g) Investments in emerging markets and renewable energy.

h) The work on responsible management, cf. chapter 2, including use of instruments and the effect of the ownership work, and how the principles for responsible management are integrated into the management.

(4) In connection with the quarterly and annual reporting, the Bank shall provide an account of decisions pursuant to the Guidelines for observation and exclusion from the GPFG and update the public list of companies that have been excluded or placed under observation pursuant to the guidelines.

(5) The quarterly reporting shall be published no later than one month after the end of the quarter. The annual reporting shall be published no later than three months after the end of the year. The main content of the annual reporting shall be made available in print. Other data may be reported electronically.

Section 6-3 Publication of calculation methods and data

(1) Data and methods used in the public reporting shall as far as possible, within the limits defined by responsible execution of the management assignment and statutory duties of confidentiality, be described and published in machine-readable form.

(2) If the calculation methods underlying the reporting of return and risk have changed since the last reporting, an account shall be given of why the methods have changed and information shall be provided on any effects of the changes. In addition, for the next two years pro-forma figures shall be provided in accordance with the previous calculation methods.

Section 6-4 Publication of the guidelines of the Bank's Executive Board

The principles, guidelines and limits laid down by the Executive Board as a result of this mandate shall be made public.

Chapter 7. Relationship between the Ministry and the Bank

Section 7-1 Duty to inform

(1) The Bank shall communicate its strategic plan for the management of the investment portfolio to the Ministry, cf. section 1-7.

(2) The Bank shall inform the Ministry if the value of the investment portfolio changes significantly and about other significant changes with respect to its management. The Ministry shall be informed without undue delay of incidents that trigger the duty to inform.

(3) The Bank shall provide the Ministry with any information that the Ministry requests, including information to companies or persons that assist the Ministry in evaluating the Bank’s management of the investment portfolio. Data used as a basis for the public reporting, cf. section 6-2, including data the Bank does not publish in accordance with section 6-3, first paragraph, shall be systematised and available for delivery in machine-readable form.

(4) The Bank’s agreements with data suppliers shall ensure the Ministry, including any companies or persons that assist the Ministry in its assessments of the Bank’s management of the investment portfolio, access to data in machine-readable form.

Section 7-2 The Bank’s duties in the event of limits and constraints being exceeded

(1) In the event that the limits and constraints defined in sections 3-4 and 3-5 are breached, the Bank shall without undue delay assess how its management can be brought back within the limits in an appropriate and cost-effective manner.

(2) The Ministry shall be informed of any material breaches of the limits in sections 3-4 and 3-5.

Section 7-3 Quarterly meetings

(1) The Ministry and the Bank shall meet at least once per quarter. The meetings shall be convened by the Ministry. The Ministry will specify in more detail which data shall be submitted to the Ministry as a basis for its preparations for the quarterly meetings and the format and deadline for submission.

(2) The following business shall be discussed at the quarterly meetings:

a) performance in the last quarter
b) the main aspects of responsible management efforts during the last quarter
c) other matters that the Ministry or the Bank have put on the agenda

Chapter 8. Deviation from the provisions, transitional provisions and entry into force

Section 8-1 Right to deviate from the provisions

The Ministry may, in case of amendments to this mandate, establish transitional provisions. The Ministry may, in other special circumstances, allow the Bank to deviate from the provisions in this mandate.

Section 8-2 Entry into force

(1) Chapter 6 comes into force immediately. The other provisions come into force on 1 January 2011.

(2) Regulation no. 1725 of 22 December 2005 on the management of the Government Pension Fund Global, the guidelines for the management of the Government Pension Fund Global (supplementary provisions pursuant to the Government Pension Fund Act and the regulations on the management of the Government Pension Fund Global), regulation no. 242 of 24 February 2010 on the management of the real estate portfolio in the Government Pension Fund Global and the guidelines of 1 March 2010 for Norges Bank’s work on responsible management and active ownership of the Government Pension Fund Global will be repealed on 1 January 2011. The management agreement of 12 February 2001 and subsequent amendments between the Ministry and the Bank will be terminated from the same date.

(3) The Ministry may issue special transitional provisions.