Norway’s sovereign wealth fund, the world’s largest sovereign wealth fund with $1.3 trillion in assets, may be forced to reduce its positions in some companies, according to Bloomberg, recently.
The Norwegian government is trying to restructure the sovereign wealth fund’s portfolio to ensure that holdings follow the same ethical standards in all regions of the world, Bloomberg said, citing sources.
The move comes after Finance Minister Jan Tore Sanner said on Friday that Norway’s sovereign wealth fund should follow a revised set of guidelines that could lead to a 25-30 percent reduction in the number of companies it holds and no longer include any emerging-market companies in its tracker.
Sanner said emerging markets are “a complex market,” often characterized by weaker financial institutions, less open markets and weaker protection of minority shareholders’ interests.
The Norwegian Ministry of Finance also said in its annual proposal to parliament that Saudi stocks should not be included in the sovereign wealth fund pool because of environmental, social and corporate governance (ESG) risks.
The proposal still needs to be approved by Parliament, and the Ministry of Finance must win the support of other parties in Parliament to pass its proposal.
In any case, this marks the first step in a shift for Norway’s sovereign wealth fund. Earlier in the week, the fund said it intends to become a global leader in sustainable investment.
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