Investments in Land – Balancing Profit, Aid and Ethics

Norway owns and controls two large investment funds, the Norwegian Government Pension Fund – Global (GPFG) and Nordfund. Both of these funds are involved in the agricultural sector and land investments in various ways.

Being one of the largest of its kind, GPFG has a value of almost 4.7 trillion NOK (US$780 billion) and holds close to 1.5 percent of the global equity market. On a day-to-day basis the Bank of Norway Investment Management (NBIM) focusing solely on profit and exposure to risk does investments on behalf of the Ministry of Finance. NBIM is investing broadly, and is not focusing on particular sectors. If GPFGs invests in agriculture or land, it is merely a reflection of the market and the general rush for agricultural commodities and land. The ethical board of GPFG monitors investments by NBIM. However, unlike tobacco, weapons production and companies involved in child labor to mention but a few, is not among the categories the ethical board are told to follow closely.

The much smaller Norwegian Investment Fund for Developing Countries (Nordfund) has a mandate to invest in profitable projects and sustainable businesses in developing countries, focusing on both profit maximizing, and economic growth and poverty reduction in developing countries. When Nordfund gets involved in land-related issues, such as palm oil production, is done on the basis of close considerations related to economic growth and business opportunities in that area.

This paper looks closer at some of the paradoxes that surfaces when large investors are aiming at both ecologic and social responsibility and maximizing profits at the same time. We will also describe and discuss some of the existing mechanisms for influencing investment behavior of these large global players, both domestically through the government controlled bodies, and internationally through conventions such as the OECD ethical guidelines.