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The ethics watchdog of Norway’s sovereign wealth fund is set to initiate an investigation next year into firms within the fund’s portfolio, including those operating in the cryptocurrency sector, for possible ethical violations. Should any issues be substantiated, the fund may opt to divest from these companies.
On Monday, Reuters reported that the Council on Ethics for the fund will assess its portfolio companies. If a company is found lacking in ethical adherence, the council may suggest divestment or place it on a public watch list.
Norway’s Government Pension Fund Global, recognized as the largest sovereign wealth fund globally, oversees assets totaling $1.8 trillion. It was created to manage surplus revenue from the oil and gas sector, with the goal of ensuring financial stability for future generations through a diverse array of global investments.
Norway’s Ethics Council to Investigate Crypto, Gambling Firms Over Money Laundering Risks
Reuters reported on a document from the ethics council that was sent to the finance ministry on October 10. The document indicates that in 2025, the Council on Ethics will examine cryptocurrency and gambling companies, among others, due to their elevated risks of money laundering.
The fund has reportedly expanded its investments in cryptocurrencies, acquiring a 0.83% stake in Coinbase valued at $453 million. It has also purchased shares in Marathon Strategy, Block, and Marathon Digital.
The ethics watchdog will additionally investigate other firms, including those in the footwear industry. It will also assess companies accused of human rights violations in the occupied West Bank.
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Ethical Standards Lead Norway’s Fund to Exclude Hundreds of Firms
As reported by Reuters, Norway’s fund has excluded 189 companies on ethical grounds. This list includes Airbus and Boeing for their involvement in nuclear weapons production, as well as Glencore and RWE for their coal-related operations.
The fund’s investment decisions are also influenced by various ethical criteria, such as human rights violations, significant environmental harm, severe corruption, and the production of tobacco and cannabis.
Its main objective is to distribute risk across different asset classes to secure stable long-term returns. While cryptocurrencies carry risks, they provide a diversification advantage due to their low correlation with conventional financial assets.
Nonetheless, cryptocurrencies like Bitcoin continue to face scrutiny for their energy-intensive mining processes, which may conflict with the fund’s ethical investment guidelines.
Last month, a Norwegian government committee suggested postponing the introduction of a central bank digital currency (CBDC). It noted that there is no urgent requirement to enhance financial inclusion or emergency preparedness, but highlighted the necessity of establishing regulations for potential future issuance.
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