Norway’s Sovereign Wealth Fund at the Crossroads of Petroleum Legacy and ESG Future 

By ESG Analyst Riordan Routh

In the intricate crossroad between economic prosperity, financial stewardship, and sustainable investments, we find the Norwegian Sovereign Wealth Fund. Stemming from the petroleum industry, this Fund has somehow also been mentioned for spearheading the global movement towards ESG investing. This article demonstrates the challenges Norway faces by leveraging its oil wealth to align with the principles of sustainability and ethical investment. 

The history behind the Fund

The idea for the Norwegian oil fund started when the government claimed sovereignty over the continental shelf. The 1960 prime Minister Einar Gerhardsen wanted to ensure responsible and long-term management of the petroleum resource for the government. It was only in 1996 that the fund received its first capital transfer. The assets under management were invested in the same way as the Norwegian Central Bank foreign exchange reserves. 

As the fund grew, investments grew from government bonds to equities and corporate bonds. The thin ethical ice the oil fund was standing on began to crack when its portfolio included companies in the tobacco and weapons industries respectively. In 2004 Ethical guidelines for the fund were established and after a few company exclusions in 2005-2006 they started to divest from companies that did not follow the clear ethical guidelines. Noticeably on the 28th of March 2006, the Norwegian Sovereign Wealth Fund divested 372 million dollars from Walmart Stores Inc. for a “Breach of human rights and labour rights”. In that first divestment lies the major interest in the Norwegian Central Bank. 

The 1.4 billion Dollar Objective: Achieving Net Zero by 2050

The 1.4-billion-dollar fund now uses RepRisk, the largest ESG technology company, to monitor the ESG levels of its investments. This further aligns with the aim of its portfolio companies to achieve net zero emissions by 2050. Norges Bank claims that it fulfills this goal through divestment, exclusion, and most importantly voting on invested company boards. Deputy CEO Trond Grande describes this strategy as “standing up to corporate giants.” The Fund tries to vote at every shareholder meeting, constantly pushing forward ESG agendas. As seen in the graph below, a majority of the Norwegian Wealth Fund’s meetings focus on sustainability and governance. Altogether, these goals and active impact investments show the potential of asset management funds with long-term sustainability goals.

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Graph 1: Number of meetings focusing on sustainability and governance

The Ethical Paradox: Petroleum Wealth in the Vanguard of Impact Investing

The dual nature of the fund’s revenue is gradually shifting. Revenue from oil and gas represents less than half of the value of the Assets. A majority now stems from equities, fixed income, real estate, and renewable energy infrastructure. The stewardship of the nation’s wealth shows the complex transition from oil to diverse investments to ensure the future of the Norwegian Economy. 

If Norwegian oil extraction continues at the same rate, resources will be depleted by 2060. In other regards, the fund is seen as a strategic shift towards sustainable diversification. This movement reflects a broader trend in sovereign wealth funds adapting to global financial and environmental changes. However, in recent events at COP 28, Norway’s example has been used to justify fossil fuel production in countries like Guyana. Its highly contested newly found oil reserves are taking steps to avoid full dependence by diversifying its economy, similar to Norway’s approach with its Sovereign Wealth Fund. This trend focusing on long-term economic stability and sustainability through diversified investments, reflects the global shift towards the importance of ESG and impact investing.

From all the good and innovation, the fund has created, it is hard to turn a blind eye to the long-term financing it has received from the oil and gas industry. The International Energy Agency opposed Norway’s plans to expand its petroleum production. Stating that “no new fossil fuel production projects are compatible with limiting global warming to 1.5C.” Although Norway’s population lives to one of the greenest standards in Europe, it is increasing petroleum exports. This lack of reconciliation between the Sovereign Wealth Fund and the Norwegian Petroleum industry takes away from the pioneering in ESG investing done by Norges Bank. 

Influence on Global Investment Trends

Publicly excluding and divesting from companies using the largest sovereign wealth fund is a trendsetting move towards transparency in ESG investing. Highlighting international ethical boundaries ensures that high-profile companies are kept to rigorous standards. Since 1998, the fund has generated an average return of around 6%. This shows a consistent return on invested capital whilst achieving ESG goals. These investments demonstrate the feasibility of transitioning an economy’s reserves from traditional fossil fuel to sustainable investment models.

The Norwegian Sovereign Wealth Fund displays the journey from relying on oil wealth to becoming an ESG pioneer in impact investing. If this article highlights the fund’s ethical and strategic shift towards a sustainable portfolio. Norway’s expanding petroleum production juxtaposes its ESG commitments. This dichotomy is central to understanding to complex nuance in ethical investing for resource-rich nations.


The history. Norges Bank Investment Management. (n.d.).

Marsh, J. (2022, July 27). Why Norway’s $1.3trn wealth fund prizes transparency so highly. Capital Monitor.

Observation and exclusion of companies. Norges Bank Investment Management. (n.d.-a).

José Enrique Arrioja | January 23, 2024. (2024, January 25). Can Guyana beat the resource curse?. Americas Quarterly.

Lo, R. and J. (2023, June 30). Norway approves oil and gas fields despite cop fossil phase-out push. Climate Home News.,global%20warming%20to%201.5C