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Norway’s Pension Fund: Is Norway a Responsible Lender? A new critical report by SLUG

15 July 2009

The Norwagian Debt Campaign, SLUG (Slett U-Landsgjelda) has released an innovative new report which explores the ethical implications of the Norwegian Government’s Pension Fund (GPFP). “Borrow My Pension. The Norwegian Government Pension Fund – A Responsible Lender?” raises serious questions about whether the investments in sovereign bonds by the GPFP meet certain social and ethical standards. The subject to-date has received little attention.

At end-2008, the fund’s holdings amounted to over US$340bn making it the world’s second largest Sovereign Wealth Fund. The pension fund holds about one quarter of its investment portfolio in sovereign bonds. To invest in bonds is a means of lending money. The Norwegian Government has the stated aim that the Government Pension Fund be the best governed fund in the world. Yet with respect to investments in sovereign bonds, the only restriction so far placed on the fund is the prohibition on investing in bonds issued by the state of Burma (Myanmar). SLUG argues that the lack of an ethical framework for investments in government bonds means that Norway is, in effect, an irresponsible lender. This is in stark contrast to its more progressive stance on issues related to responsible lending and illegitimate debt. Yet there is clear government complacency on this issue. SLUG calls for a more comprehensive ethical framework to be established to ensure ethical investments and responsible lending by the fund.

The report assesses the responsibility of the fund against the benchmarks set-out in Eurodad’s Charter on Responsible Finance. In particular, it focuses on transparency of the bond issuance; use of proceeds from the bond issuance; human rights situation in the issuing state and issues related to procedures to be followed when the debtor is unable to pay.

The report proposes a checklist to be derived from universally commonly accepted ethical principles. For example, the sovereign must respect human rights, international law and transparent procedural arrangements.

The report focuses on a little covered area of the international sovereign debt debate, i.e. just how far are blanket investments in sovereign bonds ethical? It will surely generate lively and constructive debate.

Access the full report in English

More information on Slug