The Norwegian sovereign wealth fund, which has assets worth $2.1 trillion and is the largest in the world, is preparing to change its investment policy after more than a 20-year pause. It is expected that starting in 2027, the fund will be able to invest in leading defense companies, which was previously prohibited by ethical guidelines.
This is reported by Finway
Review of Ethical Standards and New Investment Opportunities
The Norwegian Parliament has decided to review the ethical principles of the fund, which have been in place since 2004, in response to new security threats related to Russia’s war against Ukraine and the heightened rhetoric from former U.S. President Trump regarding the defense of Europe. Under the new rules, the fund will be able to invest in companies that were previously off-limits due to their production of nuclear weapon components.
“This move will allow the fund to acquire stakes in 14 defense companies with a combined market capitalization of about $1 trillion, in which it currently cannot invest according to ethical principles, as they manufacture components for nuclear weapons. The Norwegian Parliament voted to revise the ethical principles of the fund, which have been in effect since 2004
Among the companies that the Norwegian fund plans to invest in are defense giants such as Lockheed Martin, Boeing, Airbus, BAE Systems, Safran, Thales, BWX Technologies, Northrop Grumman, Fluor, General Dynamics, Huntington Ingalls Industries, Jacobs Solutions, L3Harris Technologies, and L&T.
Growing Interest in the Defense Sector
The continuation of Russia’s war against Ukraine and the increase in defense budgets of European countries under pressure from the U.S. are making shares of defense companies increasingly attractive to investors. New security challenges in the world have opened up profit opportunities for the Norwegian fund from investments in this sector, which was previously considered unacceptable for ethical investments.