While Norwegian oil extraction yields large profits, this money is generally not introduced to the Norwegian economy. Rather, it is invested abroad to preserve it for the welfare of future generations, when a changing demographic will make the current pensions system more expensive to uphold. The money is meant to be used when the tax contribution from the working population can no longer cover the increasing expense of pensions as the population in Norway is ageing.
For now, the money is invested in a number of companies around the world, through a fund. This fund, The Government Pension Fund Global (GPFG), is currently the largest in the world with a single owner. On average, it holds more than one per cent of global share value.
Major investments in Asia and Thailand
While the majority the GPFG is invested in Europe, the emerging markets of Asia is also an area of focus. In total, the fund currently invests more than NOK322.000.000.000/THB1.500.000.000.000 in Asian markets, in a total of 2902 investments.
While the fund does not currently invest in businesses based in Myanmar or Cambodia, it has invested more than NOK 5,700,000,000/THB28.000.000.000 in 44 businesses in Thailand. An updated list of the companies GPFG invests in in the region can be found here.
To help ensure that Norwegian oil revenue does not have a negative impact on the countries the fund invests in, the GPFG has a number of ethical guidelines. These state that the fund cannot invest in companies involved in the production of nuclear weapons, cluster weapons, land mines or biochemical weapons. In addition to this, the fund is banned from investing in companies involved in grave human rights violations and environmental destruction. Transparency is important in order to make sure that these ethical guidelines are followed. Therefore, the GPFG is open about where it invests, and about the returns of its investments.
It is important that Norwegian welfare is not secured at the expense of other people or the environment. In addition to this, as a long term investor, the GPFG also believes that investing ethically is good for business. An example of this is that while child labour may be cheap and increase returns in the short term, it can lead to an increase in illiteracy which hinders growth in a long term perspective.