In opening remarks to a hearing before Parliament's finance committee, Norges Bank Governor Ida Wolden Bache said the Government Pension Fund Global is operating in a riskier environment shaped by war, protectionism, economic fragmentation and technological change, and cautioned that recent strong returns should not be assumed to continue. She said the Ministry of Finance is reviewing the fund's investment strategy, with bond investments, geopolitical risk and concentration risk in the equity portfolio among the key issues, and that Norges Bank will provide assessments and analysis in autumn. Bache noted that the fund returned 15.1 percent last year and that the equity portfolio has gained more than 70 percent over the past three years, helped by rising technology stocks, but said this has also increased the weight of a small number of companies in the portfolio. She also pointed to higher government debt in many countries. On responsible management, she said temporary ethical guidelines set by the Ministry require the Council on Ethics to identify companies for possible ownership action and inform the bank, and that Norges Bank will strengthen due diligence and react faster when the basis for the fund's investments in a country changes materially over a short period, including because of war. She also highlighted executive board work over the past year on responsible use of artificial intelligence, operational resilience, a revised real estate strategy and a higher ambition for investment in unlisted renewable energy infrastructure. A government-appointed committee set up in November is reviewing the ethical framework after debate over the fund's investments in connection with Israel's occupation of Palestinian territories and the war in Gaza. Norges Bank said it will continue to manage the fund for the highest possible return in a responsible manner while the ethical framework review and the broader investment strategy work continue.
Norges Bank 2025-05-05
Norway's Norges Bank flags higher geopolitical and concentration risk for the Government Pension Fund Global and will submit strategy analysis in autumn
Norges Bank Governor Ida Wolden Bache told Parliament that the Government Pension Fund Global faces a riskier environment and that recent strong returns should not be assumed to continue, as the Ministry of Finance reviews the fund’s strategy with a focus on bond investments, geopolitical risk and equity concentration. She highlighted plans to strengthen due diligence and accelerate responses to material country risk changes, work on responsible AI use, operational resilience and real estate strategy, and higher ambition for unlisted renewable energy infrastructure. A government-appointed committee is reviewing the fund’s ethical framework after debate over investments linked to Israel’s occupation of Palestinian territories and the war in Gaza, while Norges Bank continues to target the highest possible responsible return.