The Norwegian sovereign wealth fund, an almost infinite wealth for the Scandinavian country

Fueled by gas and oil revenues, Norway’s sovereign wealth fund, the world’s largest, has just broken a new record: it earned 125 billion euros in the first quarter of 2024.

When we think of Norway, the first images that come to mind are those of fjords and colorful wooden houses on the banks of lakes. But Norway is also the largest sovereign wealth fund in the world. This fund has just broken a new record in the first quarter of 2024, it gained 125 billion euros and reached 1,510 billion euros of valuation, announced Wednesday, August 14, the Norwegian central bank, responsible for its management. This fund, created in 1990 and managed by the Norwegian Central Bank, is fed by gas and oil revenues, the deposits of black gold are plentiful off the Norwegian coast. But the government is well aware that they will one day dry up.

For several years now, the fund has been diversifying in all directions abroad (shares, bonds, real estate). For example, it owns shares in more than 900 companies, including almost all of the CAC40 groups, but never more than 10% to dilute the risks. He has also started investing in renewable energy projects that are not yet listed on the stock exchange,because he takes advantage of his weight to impose ethical requirements to the companies in which it invests. SOur credo is the so-called “responsible” investment. Which means, not investment in nuclear weapons manufacturing, tobacco production or activities that violate human rights or destroy the environment.

The fund also campaigns to increase the number of women on boards of directors. For the past year, he has been voting against the customary practice of exclusively male appointments to the boards of directors of Japanese companies. He also meddles in executive compensation. For example, in June he voted against Tesla boss Elon Musk’s $56 billion pay package. He reportedly encouraged Coca-Cola, Apple and Pepsico to reduce their bosses’ compensation, which they considered excessive. Finally, everything is transparent: you can see all the investments on the internet.

This prodigious nest egg indirectly benefits the Norwegians. The state can draw up to 4% of the fund to balance its budget. protects it from possible falls in oil prices (as during the pandemic). It finances the future expenditure of Norway’s generous welfare state. MBut be careful, safeguards included in the fundamental law prevent the State from drawing too much on its savings.