The Government Pension Fund Global of Norway, considered the largest sovereign fund on the planet, could substantially modify its investment strategy after an independent committee, constituted by the Norwegian Executive, has advised softening the ethical criteria of the state vehicle in order to allocate resources to the defense sector and the arms industry, which until now has been excluded for moral reasons.
This group of experts was tasked with reviewing the ethical framework and other aspects of the responsible management of the fund, and suggesting specific adjustments related to the military industry, in a context where the arms business has gained strong momentum in recent years.
After its analysis, the body has determined that Norges Bank Investment Management (NBIM), responsible for managing the fund, should relax its requirements regarding companies that manufacture nuclear weapons or related components, as long as these are based in a country recognized as a nuclear power under the Treaty on the Non-Proliferation of Nuclear Weapons and that, furthermore, is an ally of Norway.
In practice, this approach would encompass most of the major Western companies in the defense sector, which would open the door to taking positions in European and American groups that have recorded significant growth in light of the rearmament policies of the Atlantic bloc.
"The situation regarding security policy has changed: we are strengthening our national defense, the protection provided by NATO's 'nuclear umbrella' has gained greater importance, and the companies that are being readmitted manufacture weapons that we need for our own protection," states the committee's statement.
In parallel, the report proposes that the criteria focus on the conduct of companies, instead of maintaining the current rule that places the focus of supervision on states and prioritized diplomatic channels to address these issues.
"Therefore, it is proposed to eliminate the criterion that requires an explicit assessment of the use of weapons by states in accordance with international humanitarian law," it has indicated.
Likewise, the committee suggests reducing the weight of the ethics council, which until the start of this review suggested concrete measures, so that it only deals with assessing the moral risk associated with investments.
"The committee emphasizes that Norges Bank must be prepared for situations where a conflict leads to war. The Committee's proposals are designed to enable the bank to respond quickly to such scenarios. It must prepare to conduct exercises on possible situations, while ensuring that its case analysis processes remain rigorous," the note assures.
The Government will analyze the report
The Minister of Finance of Norway, Jens Stoltenberg, has indicated that they will study the ruling and that its conclusions will undergo a public consultation process, which will be open until January 15, while expressing his gratitude to the committee specialists for their work.
"It is a deep-rooted tradition that important decisions regarding the management of the Fund are based on thorough professional assessments and broad political support. All those who care about protecting the Norwegian welfare system should be concerned about protecting the Fund," Stoltenberg has highlighted.
"We will now carefully study the committee's recommendations and facilitate a broad debate. Only once this process is completed, and after considering both the report and the responses to the consultation, will the Government draw its own conclusions," he has added.
Criticism from Amnesty International
The organization Amnesty International has warned that the committee's proposals represent a significant weakening of control mechanisms regarding Human Rights, reduce transparency, and complicate the exclusion of companies involved in serious abuses.
According to the NGO, cutting the powers of the ethics council means that the risk assessments it produces will not be made public when certain conditions related to the fund's economic interests arise, which, in its view, represents a serious setback in terms of integrity and accountability.
Similarly, it has denounced that the suggested modifications leave the marketing of generic products that may have military uses, such as cloud computing, artificial intelligence, or massive data analysis, outside of scrutiny.
"Human rights and independent oversight cannot be optional when they are inconvenient or costly. Norway must apply the same principles to the management of its own wealth that it expects others to respect. It must ensure that transparency, accountability, and human rights remain fundamental in the management of its assets. The committee's proposal should not be implemented," asserted John Peder Egenaes, Secretary General of Amnesty International Norway.
Impact on defense companies
The possibility that the world's largest sovereign fund could enter the defense business has spurred investor appetite for major military groups in the United States and Europe, which have recorded strong gains in the stock market.
In the Old Continent, the German Rheinmetall (+6.26%), the Italian Leonardo (+4.77%), the French Thales (+2.77%), the British BAE Systems (+2.59%), and, to a lesser extent, the Spanish Indra (+0.92%), closed this Friday's stock session in positive territory.
On Wall Street, major U.S. companies in the sector have also seen their performance improve in the markets, including Lockheed Martin (+2.63%), Northrop Grumman (+2.70%), RTX (+3%), and General Dynamics (1.66%).