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He who is faithful in what is least is faithful also in much," says Henrik Syse. Norway has hired Syse, a professional philosopher who has written books about the ethics of war as well as ethics in everyday life, to figure out how the Norwegian government's Petroleum Fund can act as investor in an ethically beneficial manner.
"My main job is to sit and think," Syse jokes.
He is not alone in working toward an ethical management of the fund. The Finance Ministry's "ethical guidelines" include a list of no-goers for the Petroleum Fund. The decision as to which companies actually to exclude is made by the Ministry itself, with advice from a separate Ethics Council. But after this gatekeeping, which is based on principles decided on by Parliament, there are still many ethically diverse companies left in the fund's portfolio. (So far 17 companies have been excluded, while close to 3,500 are part of the portfolio.) And this is where the bank's own ethicists and corporate-governance people, such as Syse, have to do their work.
Apart from being concerned with the ethics of large investments during work hours, Syse—the son of a former prime minister of Norway—teaches Sunday school at an Evangelical-Lutheran church in Oslo. We are sitting in his office in the Norwegian Central Bank, where Syse began working as an in-house ethicist last fall. Corporate governance, it's called: the philosopher is in charge of how the fund uses its ownership rights.
How do you feel about being a "moral compass," as The Wall Street Journal called you, for one of the richest countries in the world?
I don't exactly see myself as a moral compass. There are so many people here in the bank with excellent moral compasses already. But whoever has power also needs direction, and hopefully I can help give direction to our work on corporate governance. As an ethicist in charge of this field in the Petroleum Fund (as of 2006, it's officially called The Government Pension Fund—Global), it is my work to coordinate our long-term dealings with more than 3,000 companies from all around the world. We have to decide how we want to use our ownership rights, how we want to vote in annual general meetings, who we want to see on the boards of directors, and so on. That doesn't necessarily make me a "moral compass," but I participate in daily discussions and bring in the ethical perspective.
When we work on the governance of the companies we invest in, we have strategies based on ethical, social, and environmental concerns, as well as more traditional governance and financial concerns. Integrating ethics in that way is a good thing in itself, of course. But it is also profitable in the long run, which is why it is important for a serious investor to care about these things, Remember, we are a long-term investment fund. We are not primarily interested in what happens during the next two months, but how it will look 20 to 50 to 100 years from now. Norway's oil income is a gift that should be shared jointly with future generations. It's not a good investment for us to support companies that bury containers of poison that will leak in two years and destroy their local communities. And extensive corruption, which can provide short-term profits, could undermine a company's trust; such a company, therefore, is not a good place for long-term investments.
The Petroleum Fund is one of the world's largest single-owned institutional funds, with approximately $210 billion in assets, of which 40 percent is invested in stocks. So even if we only own a small share in each company, we are a major actor, and we have to use that power in a wise and prudent way. Look what happened with Enron! Enron has taught us that we must be active and keep our eyes on the ball. We can't afford bad ethics.
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