NORWAY - The Government Pension Fund - Global has pledged its continued devotion to ethical investing, in a speech given by Norges Bank Investment Management (NBIM) governor Svein Gjedrem.
"Being engaged internationally is, fortunately, a trait by which Norwegians are known. Maybe we do not always succeed in our endeavours. But the idea of not being engaged, of not using our influence, of not taking the long-term perspective, and instead just standing on the sidelines, is foreign to us," said Gjedrem.
Gjedrem said NBIM must make sure that environmental sustainability and social issues were factored in, since they were crucial to future returns, and to the fund's legitimacy.
He added there should be barriers against certain acts and investments, no matter how profitable, because ethical behaviour was a goal in itself.
"The management of the fund is of course subject to certain requirements. But when considering what these requirements should or should not comprise, it is important to tread carefully.
"Even though globalisation has reduced the emphasis on national borders, we must show caution when we invest in foreign markets - because when we do so, we are entering our neighbour's house."
Gjedrem said the list of global issues that required urgent attention seemed never-ending, and there had been calls for the fund to address many of these, but priorities always had to be made to avoid the risk of spreading resources too thinly.
"Norway has chosen its goals for the pension fund based on a long-term perspective, and we do not want to be ruled by the tyranny of the impulsive and changing priorities that beleaguer many public programmes and sectors," said Gjedrem.
The Norwegian Government Pension Fund - Global, the world's second largest fund, has around NOK2200bn (US$406bn) in assets under management.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.