GAPP Principle 19

The SWF’s investment decisions should aim to maximise risk-adjusted financial returns in a manner consistent with its investment policy, and based on economic and financial grounds.

• GAPP 19.1 Subprinciple If investment decisions are subject to other than economic and financial considerations, these should be clearly set out in the investment policy and be publicly disclosed.
• GAPP 19.2 Subprinciple The management of an SWF’s assets should be consistent with what is generally accepted as sound asset management principles.

Status: Implemented

The stated objective of the asset management in the mandate is to maximise long-term return net of costs measured in Norwegian kroner, subject to specified risk limits. Within the scope of this objective, the Fund shall be responsibly managed.

The Ministry of Finance has issued Guidelines for Observation and Exclusion from the Government Pension Fund Global (GPFG) based on ethically motivated criteria. The guidelines are in place to reduce the risk of being invested in companies deemed in serious violation of fundamental ethical norms. The guidelines stipulate the process for observation and exclusion of individual companies from the GPFG investment universe. The guidelines are publicly disclosed. Decisions on exclusion (or re-inclusion) of individual companies pursuant to these guidelines also pertain to the investments of the GPFN.

The management mandate issued to Folketrygdfondet requires a broad set of principles for responsible management of the GPFN investment portfolio to be established. The mandate further states that such principles be based on recognised principles and standards, such as Norwegian Code of Practice for Corporate Governance (NUES), UN Global Compact, the OECD Guidelines on Corporate Governance and the OECD Guidelines for Multinational Enterprises. According to the mandate, Folketrygdfondet shall take into account the investment strategy and the longevity of the Fund in the design of the principles for responsible management.

Folketrygdfondet has published a set of ownership principles and expectations documents on specific topics to ensure transparency and predictability in the exercise of ownership rights associated with Fund investments. The overall objective for the exercise of ownership rights is to safeguard the financial interests of the Fund in the long term.

Sources: GPFN mandate, Guidelines for Observation and Exclusion, Folketrygdfondet’s website.