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- [00:01]
A
Hi, everybody. Tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. Hi, everyone. I'm Nicolai Tangen, the CEO of the Norwegian Sovereign Wealth Fund. And today I'm really excited because I'm here with a guest who has defined the last 30 years of Norway's place in the world. So warm welcome to Jens Stolenberg.
- [00:22]
B
Thank you so much for having me.
- [00:23]
A
Now, you created the fiscal rule that turned Norway's oil money into the world's largest sovereign wealth fund. You've been Prime Minister twice, you led NATO for 10 years, and now you are back as Finance Minister running the fund you helped create. So very, very interesting.
- [00:40]
B
It is a fascinating history and of course there have been many decisions making this fund possible. But actually, when I became finance minister 30 years ago in 1996, that was the year we made the first installment into the fund. And since then I've followed the fund very closely.
- [00:59]
A
There's been some pretty big calls done here. So, one, to save the revenues, invest in equities. And then of course, you also have the spending rule. So what do you think are the most important ones? And were they obvious at the time?
- [01:10]
B
No, all of them were politically controversial. And I think what we have learned in Norway is that if you want to make or to create a certain wealth fund, you have to make three important political decisions. One is how much to save. The second is how much to use. So how much to put in and then how much to take out of the fundamental. And then the third decision is where to invest. To the first question, how much do you save? By law, we decided that all the oil and gas revenues are saved, every cent, every dollar earned is saved into the fund. That's the first decision, how much to put in. The second important political decision is about how much to take out. And then we created a golden fiscal rule back in 2001, and that says that the only thing we can withdraw from the fund is the expected financial real return, meaning that we have estimated that to be 3%.
- [02:16]
A
Do you think you would have done that differently if you knew how big the fund would become?
- [02:20]
B
No, I don't think so.
- [02:21]
A
Do you think that, for instance, would have been a clause that the fund cannot account for more than. I don't know, now it's 25% of the state budget. Do you think, for instance, you would have put in one max at 10%?
- [02:32]
B
No, I don't think so. But of course I was Prime Minister when we decided that rule. So maybe I'm very biased. It has served Norway well for now 26 years. The fiscal rule to only spend the expected real return. And I will always be open to other models to listen to alternative ways of doing this. But. But fundamentally, I think we need to understand that the oil and gas wealth is not for the Norwegian state. It's for the Norwegian people. And by spending the financial return, we ensure that the Norwegian people today and in the future will benefit from the oil and gas wealth. But then just the third political decision is then where to invest. And we decided back in 1997, actually, in this room, this very room, the Minister of Finance, to then start to invest in equity.
- [03:27]
A
Do you think it's making the country complacent?
- [03:31]
B
At least there is a risk, and therefore we need to be aware of that risk. Because we have seen other countries become too complacent if they have too much oil and gas revenues. Again, it helps that we save everything. So the only thing we spend is 3%, because if we spent it as we earned it, we would have spent much more and then we would have been without it in oil and gas revenues when the production now has started to go down. But again, it's not a problem to be rich, but it's a challenge to not become complacent. And the main message from me as Minister of Finance is that the main source for our wealth is not oil. The main source of our wealth is. Is labor work. And therefore we need to do whatever we can to mobilize more Norwegian to work more.
- [04:32]
A
Last year you suspended the Ethics Council. Why?
- [04:37]
B
Because it had some unintended consequences that was not foreseen by the Norwegian Parliament when they decided these ethical guidelines back in 2004 and adjusted them in 2024. The fund is still managed within an ethical framework. You know better than anyone that there's still a responsible management. There are expressed expectations to the companies. The fund can be in dialogue with different companies and in some cases also divest from those companies. The thing we. And of course they had to follow Norwegian law. It has to. To follow international law. The thing that under management of the fund is based on core guidelines from the OECD and the un. The thing we suspended was a part of the ethical guidelines, a system where we have an independent ethical council giving advice to the Norwegian bank to defund, to withdraw from companies.
- [05:47]
A
And then you set down a committee to review this. What do you hope they will come up with?
- [05:50]
B
I hope they will come up with guidelines that will ensure that we continue to have a solid ethical framework around the fund, but which will work in a better way than the previous guidelines did, at least towards over the last years. Because what we have seen is that these ethical guidelines have led to that. We are not invested in major defence producing companies producing key defence capabilities which Norway are dependent on. Norway buys F35s, but we cannot be invested in Lockheed Martin producing those F35s. We cannot be invested in Boeing, which are delivering key military capabilities not only in Norway, but to NATO allies and to Ukraine. And for me that's a paradox that companies which are so critical for our security, we buy a lot from them, but we cannot own 1% of the equity.
- [06:50]
A
Big tech companies. Now some people ask who are the big gainers from what's going on in the tech world? And it's basically one of them is the Norwegian sovereign wealth fund. I think last five years won 1600 billion Norwegian kroner from the top, from the top companies. Now the top 10 companies in the portfolio account for 25% of the fund. What are your reflections about that?
- [07:19]
B
First, it's the same as you just stated, that hardly anyone in the world has earned more money from tech companies than Norway because we have been invested in them for a long time. We have followed up as the equity and share prices have increased and also the returns from those investments has been incredible. Then of course, if something goes up, it also is that it can fall down. And I will not speculate about the likelihood of what will happen in the US stock market or with these specific companies. As you said, 10 companies, roughly 25% of the wealth of the sovereign wealth fund. But my main challenge is to address the issue. Should we change the guidelines? Because the guidelines decided by the Norwegian government is that you should be broad invested in all listed companies, follow the international markets and kind of index fund. And I think that if I started to politicize that and to say that no, no, now I believe that the market in the US will go down because it is so high. First of all, it has been kind of a concern for many years and that will continue to increase. So if we had made that decision four or five years ago, we have lost a lot of money. Second, I'm just afraid that if we try as politicians to forecast the market, we will end in a very bad place.
- [08:49]
A
Mr. Stoltenberg, we have some big privately held companies coming to the stock market this year. You know, SpaceX, Antropic, OpenAI. Do you think the fund should be able to also own private companies?
- [09:01]
B
Well, this is a very sensitive political issue in Norway. And of course it has been a great advantage that we have a very high degree of transparency, we have easily defined benchmarks, and that's more straightforward at least to establish. When you have listed companies as we invest in today, then I admit that there is a dilemma that some of these big private companies will most likely soon become public companies and then we will buy into them. So the pilot is as soon as SpaceX or Anthropic, whatever, or OpenAI becomes public companies, then nowhere will invest. Based on the fact that we follow the markets and are invested in almost all listed companies. That's a paradox. Whether that's a big enough paradox to change our policy, I think it's far too early to decide. But at least I think we should be aware of that. That's a challenge that we face that we buy as soon as they are listed.
- [10:04]
A
So, Mr. Sultenberg, just to round off, what do you think are the most important things to remember for the next 30 years?
- [10:11]
B
It is that oil and gas is good, but it's not enough to ensure that a country develops in a good way. The most important thing is, as always, that we are able to ensure that people work and that they are well educated and that we invest for the future. The oil and gas helps us, but it's not a guarantee.