Norway's Oil Fund and the Role of Ethics in the Real World

In November of 2025, the Norwegian Parliament voted to suspend its sovereign wealth fund from making ethical divestments suggested by the fund's ethics council. The decision sets a new path for the world's largest sovereign wealth fund. At stake is the future of the Norwegian welfare state. Simultaneously, the decision also illustrates the careful balance that must be struck between ethics and politics.  

Fuelled by oil profit surpluses, Norway’s sovereign wealth fund operates like an index fund. On average, it owns 1.5% of all listed companies globally. Yet, it can’t own more than 10% of any single company. By spreading Norway’s oil wealth across the world in this way, the fund reduces risk. The result has been exponential growth since the fund’s inception in 1996, growing to over $2 trillion. Owing to the fund’s sheer size, the Norwegian government supports a large portion of its welfare state using the fund - even when the government is limited to drawing 3% of the fund’s capital per year.

In the fund’s mission of securing Norway’s financial future, a set of ethical guidelines since 2004 has regulated what companies it can invest in. Monitored by an independent ethics council, these regulations prohibit the fund from investing in companies involved in wartime human rights violations, among other things. The role of the ethics council previously was to offer divestment suggestions to the Norwegian central bank. In turn, as the entity running the sovereign wealth fund, the Norwegian central bank made final divestment decisions. 

As described in an August FT article by Richard Milne, ethical questions surrounding the sovereign wealth fund were raised in 2025 by the war in Gaza. During the summer, the fund’s ethics council advised the Norwegian central bank to divest from almost half its investments in Israeli companies, following concerns around companies involved in the war. In August, the ethics council further guided divestment from the American company Caterpillar in response to the company’s bulldozers being used in the war. 

In November, the ethics council was similarly preparing to make divestment decisions for companies in Big Tech when the Norwegian government intervened and suspended the divestment process. High valuation tech companies including Apple, Microsoft, and Alphabet were accused of supporting cloud infrastructure for the Israeli war effort. As a result, the fund’s ethics council was preparing to divest from each of these companies, just as it had divested from Caterpillar. However, compared to Caterpillar, stakes in these Big Tech companies represented a much larger portion of Norway’s wealth fund (The seven most valuable companies in the world - including Apple, Microsoft, and Alphabet - consist of 16% of the fund’s entire stock holdings). Described in a November FT article by Richard Milne, centrist and centre-right politicians in Norway’s parliament agreed that divestment from such companies would endanger the sovereign wealth fund’s purpose of securing Norway’s future. It would be a step too far. Consequently, these groups worked together to halt the work of the ethics council. 

Norway’s finance minister Jens Stoltenberg framed the decision as a necessary compromise between ethics and politics. A former Norwegian PM and NATO Secretary General, Stoltenberg explained that divestment from Big Tech would negate the fund’s purpose as an index fund. Afterall, Big Tech provided both investment diversity and growth potential. With a quarter of the country’s budget coming from the fund, Stoltenberg and other centrist politicians argued that an ethics compromise was the politically necessary sacrifice to ensure the continuation of Norway’s welfare state, a welfare state that provides its citizens with some of the most generous healthcare and education programs in the world. As explained in a March FT article by Richard Milne, this sentiment was not new. The centre-right was already calling to suspend ethics rules prohibiting investment in defense related industries in the spring of 2025, also in the effort of improving the fund’s future.  

Across the aisle, members of the Socialist Left responded by denouncing the compromise as a violation of ethics. If the fund divested from Caterpillar over the wartime use of bulldozers, Big Tech should not be treated differently for supplying cloud services to Israel. To apply ethics unevenly would undermine the integrity of the ethics council, and Norway as a whole. Critics also suggested that the decision was not motivated by Norway’s best interests, but rather out of conciliation with Trump and the United States. To divest from Big Tech would be to divest from the US economy, a precarious move for a NATO country reliant on the US as an ally. 

Although the Socialist Left are correct that the suspension of divestment will damage Norway’s reputation as being “ethical,” critics would be mistaken to consider this as a failure of ethics policy. In fact, I believe this compromise shows an ethics mechanism working well. Consider a timeline in which Norway never had an ethics council for its sovereign wealth fund. Norway would never have divested from Caterpillar and several Israeli companies. More importantly, its politicians would have never been forced to draw a line with Big Tech companies. 

Even though politicians eventually chose to compromise on ethics, we must expect that countries will be “unethical” at times in order to serve their best interests. The purpose of ethics policy is not to create perfectly ethical countries. That would be naive. Rather, I believe the purpose of ethics policy is to force conversations and reconsiderations before a decision is made. This is the role that ethics policy fulfilled with Norway’s sovereign wealth fund, and I believe this is the most effective role ethics policy can play in the constant balancing act between values and politics.  

Historical Policy Analysis and Moral Luck

Often, it is important judge the morality of past policy decisions. We say which ones were morally good, which ones were morally bad, and use the insight to improve our decisions in the present. With this type of historical policy analysis, historical context is needed. By judging the effects of decisions based on the morals of the time, instead of applying our modern morals, the historical policy analysis can hopefully be more fair. However, is this enough? Is it possible that any backwards looking judgement of morality could be inherently unfair, even if we adjust for changing morals?

It could because of Moral Luck. Moral luck discusses how events occurring from chance can effect the way we make backwards looking moral judgements. For example, take two drunk drivers. They both drink the same amount of alcohol, and commit the same felony. However, by pure chance, one driver gets home safely, while the other hits and kills a pedestrian. In this situation, it is custom to say that the driver who killed someone has done something morally worse than the driver who didn't. Yet, focusing only on the decisions made, the two drivers made exactly the same decisions. It was only circumstantial luck that a pedestrian was crossing the road for one of the drivers and not for the other. If they made the same decisions, should the moral error of their actions be the same for both drivers?

This is important for backwards looking historical policy analysis because of the randomness of policy effects. With millions of people and countless moving parts, it is almost impossible to fully predict how society will react to a certain policy lever over the course of a decade, let alone longer periods of time. Moreover, when judging policy makers, there is no other driver. There is no control group to see where luck came into play. As a result, when we make moral judgements on the effects of past policy decisions, we need to take careful consideration of moral luck. When policy makers make decisions with the information that they have, their information is seldom enough to know the actual effects of a policy. If someone is throwing shots in the dark, would you blame them for missing? Probably not, and that is why moral judgements of historical policy decisions always need to be taken with a grain of salt.

dice :)

Climate change and the Non-Identity Problem

Today, climate change is becoming less like a dystopian story and more like an impending reality. Across the world, summers are getting hotter. Heatwaves are getting longer, and more frequent. With less snow my north Jersey town, the local ski resort opens 4-5 weeks a year, instead of for 4-5 months. So, although we haven't reached the blistering +4°C temperatures of the Cretaceous Period, our 1.2°C post industrialization increase is still major reason for alarm. Rightly, scientists and ordinary people are calling for policy makers to enact climate change policies to stop the progression of global warming and climate change as a whole.

Considering the possible damage that climate change can cause, it seems almost trivial to ask for justification of such policies. The classic justification is: "by stopping climate change, we are helping the people of the future who would have to live under the future effects of climate change." At a first glance, this makes sense. In fact, most theories against climate change policy choose to attack the existence of climate change, almost accepting the fact if if climate change were true the harm to future people would also be true.

Unfortunately, there is an issue with the logic that stopping climate change will help the future people living under it. In moral theory, this issue is called the Non-Identity Problem. The Non-Identity Problem appears when digging into the definition of what it means to help someone. An action helps someone when the action results in a person being in better condition when it occurs, compared to the person being in worse condition if the action had not occurred. Importantly, if the person with the action is not the same person as without the action, we cannot say that the action helped the person. This is an significant because enacting climate change policy will effect the existence of future people. Because climate policies like certain taxes and work opportunities affect peoples lives, and because these small effects add up and can eventually change when people decide to have children and how many children they decide to have, the future population with climate policies will not have the same identity as the future population without climate policies. After all, even changing the time of conception by a single day will change the identity of a future person. As such, when a policy has society wide effects multiplied over many decades, the future population will indeed have a different identity compared to the hypothetical population without the policy. This is significant because it means we cannot say that climate policies help the future population that would be living under climate change. The group living in climate change would not consist of the same individuals as the group living without climate change.

This non identity problem, which was first introduced by Derek Parfit in 1987, has been attacked and tinkered with by philosophers for decades. Yet, despite numerous attacks, it continues to undermine the intuitive assumption that we much end climate change in order to help the people of the future. For many, the solution is not to stop the fight for climate policies, but rather to change the moral motivations for climate policy. For example, perhaps a stronger justification is that we need climate policies to help preserve the institutions that we have today. You could say that institutions like countries are more likely to exist both in a world with and without climate policy, thus dodging the non-identity problem. However, in the most extreme of circumstances, a climate policy could lead to the destruction of a nation, thus returning us to the problem.

climate change !

Derek Parfit