NORWAY – One of the sharpest critics of Norway's Government Pension Fund Global (GPFG) is cautiously optimistic following the turnaround in its investment strategy announced by the new government.
According to Sony Kapoor, managing director at think tank Re-Define, the fund is finally breaking with its past by moving to adopt a new investment strategy.
His comments come in the wake of proposals by the Norwegian centre-right coalition government to invest part of the GPFG – NOK100bn (€12.4bn) – in transport and communications infrastructure.
The government said GPFG would also invest in emerging and developing countries and consider opportunities in renewable energy.
While Kapoor said it was so far only a relatively small amount to be invested in infrastructure, he welcomed the move.
He told IPE: "So far, it is only the political programme of the new government without any details, but they have agreed the agenda, so this is definitely happening.
"They have also said they will look into sustainable investment, which was our second recommendation. While they are not committed to doing it, they are [at least] committed to looking into it."
He said it was positive that political parties seemed to have "made a break with the past" and declared there was going to be a change in strategy.
"Of course," he added, "how far they go and at what speed remains to be seen. But we are hopeful given how responsive they were to the initial suggestions, and that this has been one of their declared intentions."
One driver for the change in strategy, according to Kapoor, is the performance of the fund, which stands at 3.17% since its inception 15 years ago, well below its 4% target.
Another reason is political.
"Because the political parties [in power now] were not associated with the original design, they find it easier to come up with new ideas," he said.
"If the same government had remained in place, it would have been politically harder to change, partly due to their fear this would somehow implicitly mean what they were doing before was not great."
A report by Re-Define and the Norwegian Church Aid published earlier this year sharply criticised the current investment strategy of the $760bn (€560bn) GPFG, lamenting particularly its lack of investments in emerging markets, unlisted assets and green projects.
It also attacked its dependency on oil and gas revenues.
Kapoor had been in touch with the political parties before and after the publication of the report.
He will set up more meetings for November.