The Norwegian Model

Avoiding Dutch Disease and investing ethically- Norway shows the way;

“The central bank administers the country's pension fund, which is financed mainly by Norway's booming oil and natural gas industries. As the world's third-largest oil exporter, the fund has a king's ransom at its disposal. The last time the the books were balanced, the fund disposed of €196 billion ($250 billion) in assets. Analysts predict it will grow this year to become the second-largest pension fund in the world.

Roughly four percent of the fund's financial resources have gone into the state budget every year since 2001. The money is used to cover shortages and finance projects that benefit the well-being of country's citizens. Most of the remaining sums are invested for future generations -- for the time when Norway's oil and natural gas reserves will have been used up.

The fund is responsible for no less than 0.3 percent of all the stocks traded worldwide, it holds shares in more than 3,200 corporations and its portfolio reads like a "Who's Who" guide to the world of international investment. It includes Blue Chip corporations such as Accor, Adidas, BASF, Porsche, Siemens, Volvo and Zürich Financial. Norway has shown great acumen with its portfolio -- in 2005, it had a return on investment of 11.1 percent, or about €20 billion ($26 billion)….

In November 2004, the government established ethical guidelines for the investment policy of its pension fund. Since then, an Ethical Council has overseen the various investments and separated the good from the bad. Seven corporations -- among them BAE Systems, Boeing and Honeywell -- were recently removed from the portfolio. Norwegian stocks worth 3.3 million Norwegian krona or €420 million ($535 million) have been sold as part of the ethical clean-up effort.

The corporations were blacklisted because of their involvement in arms production -- for producing components that go into the production of nuclear weapons that clash with the "fundamental humanitarian principles" of the Norwegian codex. Overall, 17 arms corporations have been declared off limits by Norway's ethics guardians.
In order to avoid similar investments in the future, Norges Bank has armed itself with a strong condex and team of ethicists. "We want to combine economic and ethical interests," investment director Knut Kjaer says. "We are powerful and we can invest in ethical values."

Related;
A Policymakers' Guide to Dutch Disease
Dutch Disease: Too much wealth managed unwisely
Initiatives; EITI, Revenue Watch, Publish What You Pay

The devil's excrement-Is oil wealth a blessing or a curse?;Tricky as this problem is, oil economies such as Norway and Alaska have come up with a clever (though still imperfect) solution: they hive off much of the oil income into “stabilisation” funds, disbursing “dividends” to citizens slowly—directly in Alaska, via social spending in Norway—so that the economy does not overheat. Chile, one of the world's more successful developing countries, has a similar fund for its copper revenues

Fuelling poverty - Oil, war and corruption

Aid, Cost Inflation and 'Dutch Disease': Effects and Implications

Links on Oil, Environment and Human Rights

How to Invest $200 Billion ... Ethically

Norwegian Government Pension Fund Dumps Wal-Mart and Freeport on Ethical Exclusions

Ethical Guidelines; Norwegian Government Pension Fund - Global

Paradise re-arranged; The recent conference in Singapore — CSR in the Travel, Tourism and Hospitality Industries 25-26 July 2006, has sparked some debate about commitment to CSR between one of the speakers — Tricia Barnett, representing Tourism Concern (a UK based NGO that works with communities in destination countries to reduce social and environmental problems and with the out-going tourism industry in the UK) and Hilton International, specifically Hilton operations in the Maldives.

The morality of tourism?

Pages

Powered by Movable Type 5.02

About this Entry

This page contains a single entry by Paul published on September 4, 2006 6:42 PM.

Books, publishers and blogs was the previous entry in this blog.

India - Five-year roadmap to fuller rupee convertibility is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.