Cold approach, warm result; the Nordic way

Norway’s Government Pension Fund seems to have it all. Oil wealth, decent returns and a responsible approach to investment.

The decision to put part of its oil wealth to work for the country’s pension pot is one that makes many pension savers in other parts of the world gnash their teeth in envy, particularly if they happen to live in a resource-rich country that has not invested its black gold in the same way, such as the UK.

Roger Scherva, Norway’s deputy finance minister, told politicians, pension fund experts and economists, at a FairPensions’ lecture, the £250bn fund is managed with an ethical obligation to gain the best returns with the least risk, following responsible investment principles.

It screens the companies it invests in, has a watchlist for unethical activities and another for good investing opportunities, as well keeping a keen eye on good corporate governance on boards.

Next year it will begin to invest nearly 500m euros in environmental companies over a five year period and is working with Sir Nicholas Stern on a project looking at the effect of global warming on pension fund investors.

And it has largely delivered good performance with the exception of last year when it continued its strategy of investing 60 per cent in equities, even in plunging markets. “Everyone thought we were crazy to buy in a falling market but this year everyone thinks we’re really clever because the markets have rallied,” says Mr Scherva.

The fund has now recouped all last year’s losses and in the next few years Mr Scherva expects the fund to double in size.

Most pension fund investors and politicians can only dream of this ever becoming a mainstream approach.

Ruth Sullivan – FT

Eat your heart out

October 27, 2009 5:59pm

by Ruth Sullivan

Norway’s Government Pension Fund seems to have it all. Oil wealth, decent returns and a responsible approach to investment.

The decision to put part of its oil wealth to work for the country’s pension pot is one that makes many pension savers in other parts of the world gnash their teeth in envy, particularly if they happen to live in a resource-rich country that has not invested its black gold in the same way, such as the UK.

Roger Scherva, Norway’s deputy finance minister,  told politicians, pension fund experts and economists, at a FairPensions’ lecture in parliament’s Westminster Hall last night, the £250bn fund is managed with an ethical obligation to gain the best returns with the least risk, following responsible investment principles.

It screens the companies it invests in, has a watchlist for unethical activities and another for good investing opportunities, as well keeping a keen eye on good corporate governance on boards.

Next year it will begin to invest nearly 500m euros in environmental companies over a five year period and is working with Sir Nicholas Stern on a project looking at the effect of global warming on pension fund investors.

And it has largely delivered good performance with the exception of last year when it continued its strategy of investing 60 per cent in equities, even in plunging markets. “Everyone thought we were crazy to buy in a falling market but this year everyone thinks we’re really clever because the markets have rallied,” says Mr Scherva.

The fund has now recouped all last year’s losses and in the next few years Mr Scherva expects the fund to double in size.

Most pension fund investors and politicians can only dream of this ever becoming a mainstream approach.

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