Nicolai Tangen, CEO of Norges Bank Investment Management, is working on a press conference on the 2024 company’s annual results at Norges Bank, Norway on January 29, 2025.
Ole Berg-Rusten | AFP | Getty Images
Norwegian government has put a strong pressure on the country’s $1.8 trillion sovereign wealth fund to invest in certain defence companies, with opposition parties explaining the long-standing ban in the current security environment as “illogical” and the current security environment.
Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund, has been prevented from acquiring stakes in companies that produce key elements of nuclear weapons since the early 2000s.
Under ethical guidelines, the fund is also prohibited from investing in companies involved in the production of cluster ammunition, anti-personnel mines, and tobacco.
The Conservative Party on the central right side of the country says it’s time to lift the government’s ban on taking stock of certain defense companies, citing Russia’s full-scale invasion of Ukraine and the “significant revival” of countries like China in recent years.
“We are currently facing the most serious security crisis since World War II. There is an urgent need for an increase in investment in the Western defense industry to protect our own security and our allies,” Tina Blue, the deputy Conservative leader, told CNBC in an email.
In her view, Norwegian Prime Minister Jonas Garst Store should seek to change the ethical framework of the country’s wealth fund to ensure that businesses deemed safe in the West are not ruled out.
A spokesperson for Norway’s Treasury ministry declined to comment when he said the government would first answer similar questions when contacted by CNBC.
Protesters raised the Palestinian flag during a demonstration outside Norges Bank headquarters in Oslo, Norway on Thursday, March 27, 2025.
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The fund has previously ruled out UK defense contractors BAE System Through company production of major components for nuclear weapons and US defense contractors Lockheed Matin Corp For cluster ammunition.
“In the West, key weapons are being raised from companies currently excluded from petroleum fund investments. It is illogical for Norwegian pension funds to prohibit investment in the same companies the government raises through state budgets,” Bru said.
Norway’s central left Labour Party is set to govern on its own until a new parliamentary election takes place in September. Amidst the civil war surrounding the European Union’s energy order, the country’s ruling coalition government collapsed earlier this year.
Norway, a founding member of NATO, works closely with the Bloc as a member of the broader European economic zone rather than part of the EU.
Surge in defense stocks
The debate over how Norwegian wealth funds should respond to the evolving security environment is time for governments to respond to rising geopolitical risks, leading to higher defense spending and boosting industry profits.
Defense stocks are usually excluded from the portfolio based on environmental, social and governance (ESG) factors due to ethical concerns regarding the association between the sector and war.
However, in recent months, ESG fund managers seem to be increasingly comfortable holdings in defense companies.
A spokesman for Norges Bank Investment Management, which manages wealth funds, declined to comment when asked about a call for revision to the fund’s ethics guidelines.
Norwegian Prime Minister Jonas Garr will give a speech at the Fall 2024 Equiner Conference, Norwegian multinational energy company held in Oslo, Norway on November 26, 2024.
Thomas Fre | AFP | Getty Images
One of the world’s largest investors, the Norwegian Sovereign Wealth Fund was established in the 1990s to invest surplus revenues in the country’s oil and gas sector. To date, the fund has invested money in over 8,650 companies in over 60 countries around the world.
According to the Financial Times, Hans Andreas Limi, a lawmaker from the Scandinavian country’s right-wing Progress Party, recently introduced a civil membership bill to remove the fund’s nuclear weapons ban. He reportedly described the ban as “hypocritical.”
Aida Cassa Johansen, director of Saxo Bank’s commercial ESG, said Norwegian Treasury should not be influenced by political pressure to lift the fund’s nuclear weapons ban.
“In the end, the Norwegian Treasury Ministry, responsible for overseeing the work carried out by Norges Bank Investment Management (in charge of managing the fund), will be the fiduciary’s duty to determine the next course of action,” Johansen told CNBC via email.
“Ministry’s actions should not be influenced by public opinion, but should influence the best interests of the fund’s beneficiaries (Norway and its present and future generations) and the laws and regulations governing the fund’s duties,” she added.
