After a record year, Norway's giant oil fund pledges to push sustainable energy

FILE - A view of a supply ship at the Edvard Grieg oil field, in the North Sea, Norway, on Feb. 16, 2016. Norway's oil fund saw the largest annual return in its history in 2023 led by a strong performance by U.S. technology companies and the Danish weight loss drug manufacturer, Novo Nordisk. (Hakon Mosvold Larsen, NTB Ccanpix via AP, File)

By MARK LEWIS Associated Press

STAVANGER, Norway (AP) — The manager of the world’s largest sovereign wealth fund pledged Tuesday to push major oil and gas companies to speed up preparations for the “inescapable” transition away from planet-warming fossil fuels while also twisting arms in U.S. boardrooms to take control of executive pay.

Hours earlier, Norway’s Government Pension Fund Global reported the largest annual return in its history, a performance led by U.S. technology companies and Danish pharmaceutical company Novo Nordisk, which makes the diabetes-turned-weight loss drug Ozempic.

The fund, which invests Norway’s profits from oil and gas, owns around 1.5% of all shares for companies listed globally, including large stakes in Exxon Mobil, Chevron, TotalEnergies, Shell and BP. It has used the assets to lobby for a speedier transition to sustainable energy and voting for more carbon reduction targets.

“It is a balancing act between sustainability and profitability. We are trying to push them to be prepared for the eventual and inescapable transition,” Nicolai Tangen, the manager of the portfolio also known as the Oil Fund, told The Associated Press.

Tangen reported that despite “high inflation and geopolitical turmoil,” the fund’s value ballooned 16% last year to 15,765 billion kroner (around $ 1,500 billion). That corresponds to $273,000 for every inhabitant of Norway, which has a population of 5.5 million.

He said the fund also benefited in 2023 from market excitement over the rapid adoption of artificial intelligence technology such as ChatGPT, while also revealing that managers used AI to “optimize deployment of capital” in its own investments.

However, Tanger said the decision he was most proud of was swooping in to take a large stake in Swiss bank UBS the day after its emergency buyout of former rival Credit Suisse.

“We thought it was a really exciting opportunity. The share price recovered and we think there is big scope for more value,” he told the AP.

The six largest contributors to the fund’s growth were the U.S technology companies Microsoft, Apple, NVIDIA, Meta, Amazon and Alphabet. Electric car maker Tesla came in seventh.

Tangen said the fund nonetheless would continue to fight “excessive” executive pay in American boardrooms. The fund voted against more than 50% of all pay deals worth more than $20 million.

Denmark-based Novo Nordisk was the next highest contributor. Ozempic was originally developed as a diabetes treatment, but its growth accelerated in 2023 as more people sought it out as an obesity treatment. Nova Nordisk also makes a higher dose version of the same medication that is sold as a weight loss drug under the brand name Wegovy.

The majority of the fund is made up of shares, but it also includes government bonds, real estate and renewable energy infrastructure.