Norway's $2.3T Wealth Fund May Reinvest in Defense Firms

Proposed ethics changes could allow Norway's $2.3 trillion sovereign wealth fund to invest in Western defense companies currently excluded from the portfolio. The fund holds around 21.8 trillion Norwegian kroner, or $2.3 trillion, making the fund the world's largest sovereign wealth fund. The fund has stakes in around 1.5% of the world's publicly listed companies and is among the largest stock market investors worldwide. A review of the investment guidelines governing Norges Bank was ordered in November 2025 following controversy over divestments from Israeli and American companies. The independent Gjedrem Committee submitted the findings to Norway's Ministry of Finance on Thursday.

Current rules prohibit investments in Airbus, BAE Systems, Boeing, BWX Technologies and Lockheed Martin because the companies contribute to nuclear weapons manufacturing. The fund holds a 2.3% stake in Germany's Rheinmetall. The fund also holds a 1.5% stake in Italy's Leonardo. The committee recommended retaining the nuclear weapons criterion but allowing investment in producers domiciled in nuclear-weapon states recognized under the Nuclear Non-Proliferation Treaty and allied with Norway. The committee said several European and American companies producing nuclear weapons components could therefore be included again. The committee recommended allowing investment in companies producing weapons Norway needs for national defense. The committee also proposed removing the requirement to assess whether nations use arms-makers' products in accordance with international humanitarian law.

The committee said Norges Bank must prepare for conflicts escalating into war. The committee cited geopolitical instability, wars in the Middle East and Ukraine, energy security concerns, and the fund's capital and influence as reasons to reassess the framework. The committee said the fund's greater access to company management and boards than in 2003 creates opportunities that management should use. The committee described a declining liberal, rules-based international order, increasingly transactional international cooperation, and economic policies used as foreign-policy instruments. The committee warned that governments could increasingly perceive ethical exclusions as Norwegian government policy, with reactions and threatened countermeasures potentially harming the fund and other Norwegian interests. The committee said pressure on public finances increases backlash risks and could encourage governments to tax foreign investors' interest and dividend income. The committee concluded that the ethical guidelines retain broad support but face political pressure, including more restrictive conditions for exercising ownership in the United States.

Norway established the fund in the 1990s to invest oil and gas revenues. Norges Bank Investment Management (NBIM) makes investment decisions, while the finance ministry and central bank participate in governance. In September last year, the U.S. State Department said the department was very troubled by NBIM's divestment from Caterpillar and five Israeli banks, alleging illegitimate claims. NBIM cited an unacceptable risk that the companies contributed to rights violations in Palestinian territories. Finance Minister Jens Stoltenberg, a former NATO secretary general, said at the time that the divestment was not a political decision.

The committee recommended retaining the Council on Ethics but limiting the council to analyzing companies' ethical breaches rather than advising NBIM on action. The recommendations will not immediately add companies to or exclude companies from the portfolio. Norway will hold a public consultation, and the central bank is due to respond in January. The finance ministry will propose a new ethics framework in a white paper in the spring. Parliament is expected to vote on the changes in mid-2027. The current ethical guidelines and exclusion framework remain unchanged until then. Council on Ethics Chair Svein Richard Brandtzæg said the council would study the findings, discuss the findings thoroughly and respond during the consultation.

Until November 2025, Norges Bank's Executive Board decided on exclusions and observation-list placements using advice from the independent Council on Ethics, appointed by the finance ministry. Temporary guidelines introduced pending the review prevent Norges Bank from making new exclusion or observation decisions and permit only revocation of previous decisions. The temporary guidelines also prevent the Council on Ethics from recommending observation or exclusion at least until the framework review is finalized. The temporary guidelines will remain in place until the 2027 parliamentary vote.

Some human rights groups criticized the recommendations and warned of implications for international investment trends. Amnesty International Norway Secretary General John Peder Egenæs said the proposals risk weakening accountability and integrity and dismantling key human rights protections. Egenæs said other investors and companies pay attention when the world's largest sovereign wealth fund changes standards. Norwegian Red Cross Secretary General Grete Herlofson called investment in nuclear weapons producers ethically and humanitarianly incomprehensible. Herlofson warned that allowing such investments would weaken the international stigma against nuclear weapons, normalize nuclear weapons and increase the risk of use.