Government strips council powers
Norway's trillion-dollar oil fund faces a governance crisis after the government neutered its ethics watchdog. Trude Myklebust has been appointed to replace Cecilie Hellestveit on the Etikkrådet (Ethics Council for the Government Pension Fund Global), but she inherits a fundamentally weakened institution.
Hellestveit resigned in November after eleven years of service, citing the loss of council independence. The breaking point came when Stortinget (Norway's parliament) decided the council could no longer recommend exclUDIng companies from the fund's portfolio. "The independent ethics council I have sat on for eleven years was dissolved on Friday and a new ethics council has been created that will not have the same role," according to NRK.
This represents a seismic shift in how Norway society manages its sovereign wealth. The $1.4 trillion fund, built from oil revenues, has long prided itself on ethical investment standards that other nations copied. Now those standards face political interference.
Myklebust returns to weakened role
Myklebust, a finance law professor at Oslo Met specializing in sustainable finance, previously served on the council from 2017 to 2022. She knows exactly what powers the position once held and what it has lost. The Finansdepartementet (Finance Ministry) appointed her to join leader Svein Richard Brandtzæg and three other members on the reconstituted council.
The timing reveals the government's urgency to fill the vacancy. Hellestveit's resignation created an awkward gap in oversight of the world's largest sovereign wealth fund. But appointing someone familiar with the council's former authority only highlights what has been stripped away.
The council's original mandate was clear: evaluate whether investments comply with ethical guidelines set by parliament and recommend divestments when companies violate those standards. According to the government, the council still assesses ongoing investments, but its recommendations now carry less weight.
Political control over ethical standards
The restructuring exposes Norway's discomfort with independent oversight of its oil wealth. Politicians want final say over which companies get excluded, rather than delegating that authority to ethics experts. This follows similar patterns where governments assert more control over sovereign wealth funds during geopolitical tensions.
For international investors, this signals a more politicized Norwegian approach to ESG standards. Companies previously worried about ethics council recommendations now need to focus on political lobbying in Oslo. The fund's ethical reputation, built over decades, becomes subject to parliamentary majorities and coalition politics.
Myklebust faces an impossible task: maintaining credibility as an ethics watchdog while operating under political constraints that prompted her predecessor's resignation. Expect the council to avoid controversial exclusion recommendations and focus on safer compliance assessments that won't challenge government priorities.
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