GAPP Principle 7

The owner should set the objectives of the SWF, appoint the members of itsgoverning body(ies) in accordancewith clearly defined procedures, and exercise oversight over the SWF’s operations.

Status: Implemented

The hierarchy of regulation, supervision and reporting related to the management of the GPFG is outlined in the figure below. For information on the objective of Norges Bank’s investment assignment and division of roles and responsibilities between the Ministry of Finance and Norges Bank, see response to principle 1 and 6, respectively. Objectives and appropriate supervisory functions are established at all levels of the governance hierarchy. The Ministry’s supervision of the Fund is regulated in the Norges Bank Act and according to the Government Pension Fund Act, and further specified in the management mandate issued to Norges Bank. Fund management is based on a governance structure in which the Norwegian Parliament, the Ministry of Finance, the Executive Board of Norges Bank and the dedicated asset management unit within the Central Bank (NBIM) hold different roles and responsibilities. The Executive Board consists of nine members appointed by the King in Council. The Governor of Norges Bank shall be chair and two Deputy Governors shall act as first and second deputy chair of the Board.

Decisions of material importance to the aggregate level of risk of the Fund are submitted to the Norwegian Parliament for deliberation prior to implementation. Based on such deliberations the Ministry of Finance adopts the overall investment framework and provisions for the operational execution of the management assignment. The provisions issued by the Ministry are supplemented by more detailed regulations and limits at the various decision-making levels. The governance model implies all in all a highly detailed regulation of the management of the GPFG.

Sources: Government Pension Fund Act, Norges Bank Act, GPFG mandate, Ministry of Finance’s website.