Friday, April 9th, 2021
Too many risks in Riyadh
Norway’s sovereign wealth fund avoids Saudi Arabia
The Norwegian sovereign wealth fund is the largest in the world. Its wealth is based primarily on income from the oil and gas business, but Norway plans to focus on the environment in the future. Investing in Saudi stocks is therefore taboo, but also because of the company’s management there.
Norway’s $ 1.3 trillion sovereign wealth fund is said to avoid Saudi Arabian companies. These should not be included in the reference index that regulates the fund’s investments, as announced by the Ministry of Finance in Oslo. The risks in the environmental, social and corporate governance areas are therefore too great, as the annual recommendation to Parliament shows.
Norway’s sovereign wealth fund, established in 1996, is the largest in the world. It is fed with the income from the Norwegian oil and gas business and acts as insurance for future generations when natural resources are depleted or frowned upon. The fund is managed by the central bank on behalf of the Ministry of Finance. He invests in thousands of companies worldwide, including large corporations such as Microsoft, Apple and Amazon.
In its recommendation to the Norwegian Parliament, the government also suggested that the fund should invest in fewer companies in the future. The number of holdings should be reduced by 25 to 30 percent to around 6600 – mainly through the separation of shares in smaller companies. The state fund currently holds stakes in 9,200 companies and owns 1.5 percent of all shares listed on the stock exchange worldwide. Almost a quarter of the assets are still invested in bonds. The fund also owns real estate.
Entry into the world market leader for offshore wind energy
Most recently, Norway also had the fund invested in infrastructure for renewable energies for the first time. For almost 1.4 billion euros, the sovereign wealth fund acquired half of the Dutch offshore wind farm Borssele 1 & 2, as the Norwegian central bank, which manages the fund, announced last Wednesday. The shares will be sold by the Danish energy company Ørsted, which will keep the other half and will continue to operate the park.
Ørsted is considered the world leader in offshore wind energy. According to Ørsted, the wind farm around 23 kilometers off the North Sea coast of the Netherlands produces enough energy with its 94 wind turbines to supply almost one million Dutch households with green electricity every year.
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