Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

The Norwegian central bank, which houses the country's sovereign wealth fund, stands in Oslo on March 6, 2018.

Gwladys Fouche/Reuters

Norway’s $1.3 trillion wealth fund, the world’s largest, should reduce the size of its global company reference index by between 25% and 30% to better follow up companies, primarily by removing small cap stocks, the finance ministry proposed on Friday.

The move reflects the growing awareness among international investors about risk in the environmental, social and corporate governance (ESG) field, in which the Norwegian wealth fund has often set the pace.

The fund’s reference index would be cut to around 6,600 firms from 8,800 companies presently, the ministry said in its annual recommendation to parliament.

Story continues below advertisement

The fund should also exclude for now more companies from emerging markets, including from Saudi Arabia, in the index governing its investment, it said.

The fund currently holds stakes in around 9,100 companies, and a smaller reference index could, over time, lead to a cut in the number of companies owned.

“We see a high number of companies leads to higher costs ... and leads to a more complex follow-up of companies,” Finance Minister Jan Tore Sanner told reporters.

“To reduce the number of companies … will to a very little extent increase the risk (for the return of the fund) and lead to a better follow-up (of companies).”

The fund pools the Norwegian state’s revenues from oil and gas production and invests them abroad in stocks, bonds, property and renewable energy projects.

The government rules in a minority and must win the support of other parties in parliament to pass its proposals.

NO NEW EMERGING MARKETS

Friday’s proposal means “neither emerging market Saudi Arabia nor Romania will be included in the fund’s reference index now”, said the ministry’s white paper.

Story continues below advertisement

The fund uses the FTSE Global All Cap index from the FTSE Russell index, which included Saudi Arabia in March 2019 and Romania in September 2020, as the basis for its own reference index.

“In emerging markets, there are, to a greater extent, weaker institutions, fewer protection of minority shareholders and so it is more challenging to have a responsible investment strategy,” Sanner told Reuters.

The fund held stocks in 24 Saudi companies worth 1.6 billion crowns ($188.1 million) as of the end of last year, according to fund data.

The fund did not take part in the IPO of Saudi Aramco .

The fund’s management, Norges Bank Investment Management, can still invest in Saudi Arabia if it so decides.

But being excluded from the reference index means the fund would invest in fewer Saudi Arabian stocks, and other emerging market stocks, than they would had they been included.

Story continues below advertisement

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies