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.