Norges Bank Investment Management (NBIM), manager of Norway’s $1trn sovereign wealth fund, has revealed that its ethical exclusions have led to an “accumulated underperformance” of 1.3% compared with an unrestricted equity benchmark index over the last 13 years.
The disclosure is made in a 124-page report charting 20 years of responsible investment at the vast Norwegian Government Pension Fund Global, over which time it has by its own admission “evolved from a reluctant to an active owner”.
Its exclusion-based underperformance translates to an average of 0.04% between its first exclusion in 2006 and the end of 2019. For contrast, the Oslo-based manager states that its annual management costs for the sovereign fund came to just under 0.05% in 2019.
The report is frank in outlining how Norges Bank has sought to negotiate its mandate to maximise financial return and the recognition by successive Norwegian governments that “there are limits t…