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Norway finalises oil fund’s RI framework and appoints new ethical council

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The Norwegian finance ministry has finalised new guidelines for responsible investment at the Government Pension Fund Global (GPFG), which include setting up a new advisory Council of Ethics.

In April this year, the Ministry of Finance said in its proposals on the matter that it was disbanding the existing Council of Ethics, which had been in place for 10 years, and that current ethical exclusion criteria would be integrated into the management mandate given to Norges Bank.

The changes had the effect of distancing the former oil fund’s ethical decision-making from direct political intervention.

The Norwegian government has frequently said the NOK6trn (€666bn) sovereign wealth fund should not be a policy tool.

However, in June, the Norwegian parliament, or Storting, decided there should still be an independent Council on Ethics, but that it should give advice to Norges Bank rather than the Ministry of Finance.

It also decided the ministry should continue to appoint the council’s members, but only after having received recommendations from Norges Bank. 

The ministry has now announced the composition of a new Council on Ethics, issued the new guidelines for the observation and exclusion from from the fund and made amendments to the Norges Bank mandate.

It said the changes would take effect on 1 January 2015.

Siv Jensen, Norway’s Minister of Finance, said: “The changes in the governing documents are a result of a long-term effort to strengthen the work on responsible investment management in the fund. 

“Emphasis is put on facilitating better interaction between active ownership and the exclusion mechanism,” she said.

The main change is that from 1 January, Norges Bank will be the decision-making authority on matters around observation and exclusion of companies from the fund, rather than the Ministry of Finance.

The new Council on Ethics will advise Norges Bank, having been appointed by the ministry, but after receiving recommendations from Norges, the ministry said.

Ethical criteria for determining which companies the fund may not invest in will continue to be decided by political authorities, the ministry said, adding that these criteria are unchanged.

The five members of the new Council on Ethics, appointed by the ministry, are Johan Andresen — who will chair the council until the end of May 2019 — Hans Christian Bugge — vice chair until the end of May 2017, Cecilie Hellestveit, Arthur Sletteberg and Guro Slettemark.

Jensen said the composition of the new council ensured it would continue to have appropriate and broad expertise.

The process of changing the former oil fund’s responsible investment framework started two years ago and has included a public consultation process, a proposal from the Ministry of Finance in its report this April and lastly, deliberations on that report from parliament.

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