Norway's Sovereign Wealth Fund Urged to Seize Divestment Opportunities in Russia

Norway's central bank recommends lifting a freeze on its $1.8 trillion sovereign wealth fund's Russian holdings to sell assets when possible. Despite geopolitical tensions, the fund aims to reduce exposure, facing challenges due to sanctions and limited market opportunities.

Norway's central bank has advised the government to permit its enormous sovereign wealth fund to divest from Russian holdings when feasible, ending the freeze implemented since 2022. The freeze was enacted by the Norwegian finance ministry following Russia's invasion of Ukraine, aiming at ultimately divesting from such assets.

The $1.8 trillion fund, managing a significant portion of global listed shares, is unable to sell Russian assets due to U.S. and EU sanctions. A recent letter from the central bank to the finance ministry recommends lifting these restrictions when opportunities arise, acknowledging the geopolitical complexities involved.

Despite sanctions complicating sales within Russia and limited external markets, Norway's ethics-driven fund governance highlights the importance of strategically managing its investments, noted for significant holdings in Russian entities like Sberbank and Gazprom. The central bank has also mandated divestment from Evraz, implicated in supporting Russia's military actions, reflecting the fund's ethical commitments.

(With inputs from agencies.)