Parliament votes to reassess ethical rules that have excluded major defence contractors for two decades, potentially unlocking new institutional capital flows amid mounting geopolitical pressures.
Norway’s $2.1tn sovereign wealth fund, the world’s largest, may be positioned to invest in defence companies after its parliament voted to review ethical guidelines that have effectively barred such holdings since 2004.
The Norway Government Pension Fund Global, established in 1990 to invest the country’s oil and gas revenues, has grown into the world’s largest sovereign wealth fund, with a diversified portfolio spanning equities, bonds and real estate across global markets.
Norwegian lawmakers voted on 4 November to pause aspects of the fund’s ethical restrictions and initiate a review by a government-appointed panel, first reported by Reuters. The committee is expected to issue recommendations by October 2026, with a final parliamentary vote on any new rules in June 2027.
Under current guidelines, the fund is barred from investing in companies involved in certain weapons production, including aviation giant Airbus, BAE Systems, Lockheed Martin and Safran. A rule change could open access to around 14 defence companies with a combined market value near $1tn currently off-limits under the ethical code.
Finance Minister Jens Stoltenberg, the former NATO secretary-general and Norwegian prime minister, called out the policy contradiction of Norway’s defence procurement this October: “On the one hand, we consider it ethically acceptable to transfer large sums to such companies as payment, while we consider it unethical to receive much smaller amounts as returns from the same companies.”
Last month, Knut Kjaer, the fund’s chief executive, told Reuters that “Europe has to defend itself from the aggression from Russia. Why should we not invest in weapons?”
The fund has also paused routine ethical divestments while the review is ongoing.
For defence investors, a policy shift could unlock a new pool of long-term institutional capital into major European and US defence companies, potentially influencing similar debates at other large institutional investors that have historically avoided defence exposure due to ESG mandates.
The review reflects a broader recalibration of ethical investment frameworks amid mounting European security pressures.