Norway’s sovereign wealth fund should invest in major defence groups, commission concludes

By Gwladys Fouche

OSLO, Oct 15 (Reuters) – Norway should allow its $2.3 trillion wealth fund to invest in major Western defence groups that are currently banned from its portfolio due to their involvement in nuclear arms production, a government-appointed commission recommended on Thursday.

The proposed change, part of a major overhaul of the ethics rules governing the world’s largest sovereign fund, could lead to investments of tens of billions of dollars in defence companies if adopted by Norway’s government and parliament.

The fund’s current rules prevent it from buying stakes in the likes of Airbus, Boeing, BAE Systems and Lockheed Martin on the grounds that they contribute to the making of nuclear weapons.

But the proposed new rules would make an exemption for companies that are domiciled in a nuclear-weapon state under the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) and which are allied with NATO-member Norway.

“Several European and US companies that produce components for nuclear weapons can therefore be reincluded,” the commission said in its proposal.

Finance Minister Jens Stoltenberg, a former secretary general of NATO, had asked the commission to review the ethics rules, citing changes to the global security situation and Norway’s reliance on NATO’s nuclear umbrella.

Other defence groups on its exclusion list are Safran, Thales, BWX Technologies, Northrop Grumman, Fluor, General Dynamics, Huntington Ingalls Industries, Jacobs Solutions, L3Harris Technologies and L&T.

Exclusions could still be upheld on other ethical grounds.

PAUSED ETHICAL DIVESTMENTS

Norway’s parliament last year paused ethics-based divestments by the state-owned fund in the face of scrutiny from the Trump administration, pending the outcome of the review presented on Thursday.

More than half the fund’s assets are invested in the United States.

Before the suspension, the Council on Ethics, the fund’s independent ethical watchdog, made recommendations to divest and sent them to the board of the central bank, which had the final say. The board usually followed the council’s recommendations.

Stoltenberg previously told Reuters the openness of the fund in publishing the reasons why it was divesting posed dilemmas.

While the Council on Ethics should remain, its operation should change and its reports no longer be automatically made public, the commission said.

Speaking before the release of the report, Stoltenberg said securing the fund, which finances a quarter of the country’s public spending, was “one of the most important things we do in Norway”.

“The world is changing and the value chain is becoming more and more integrated. It is difficult to distinguish between civil and military products,” he told Reuters on Wednesday.

He also pointed to the concentration of the fund’s value in a handful of companies, mostly US tech giants such as Nvidia, Apple and Amazon, with 10 accounting for more than 20% of the value of its share portfolio.

“This type of concentration … means that individual decisions can have much greater consequences than in the past,” said Stoltenberg, adding that his priority was for the fund to remain broadly invested.

“We should not do things that can undermine that. At the same time, we must have a good ethical framework,” he said in an interview in Norway’s parliament.

The commission’s proposals will form the basis for the government to make its own as part of an annual white paper on the sovereign wealth fund which is expected in spring 2027.

Civil society groups, including the Norwegian Red Cross, say that would legitimise investing in weapons of mass destruction. 

“The way Norway invests significant sums contributes to setting standards globally,” the Red Cross said in its submission to the commission. 

(Reporting by Gwladys Fouche, Editing by Alexander Smith)