Ambiguity, discretion and ethics in Norway’s sovereign wealth fund

Hachigian Heather ()
Additional contact information
Hachigian Heather: School of Geography and the Environment, University of Oxford, Brasenose College, Radcliffe Sq., Oxford OX1 4AJ, UK

Business and Politics, 2015, vol. 17, issue 4, 603-631

Abstract: An increasing number of public institutional investors are adopting sustainable and ethical investment policies. While financial tests of materiality and norm structures are often assumed to guide their implementation, this assumption is challenged by the increasing complexity in global financial markets. This article provides an analytical framework to explain these implementation problems by drawing attention to the ambiguity inherent in investment policies. Ambiguity means there is no ideal outcome. Agents must use their discretion to interpret investment policies, which is at odds with conventional theories of discretion that assume a unique policy goal. This article argues that ambiguity impacts institutional investors in two contrasting ways. Ambiguity acts as a built-in mechanism for adapting investment policies to increasing complexity in global financial markets. But the resources required to maintain legitimacy under ambiguity detract from the investor’s capacity to actually implement its policy. This framework is used to analyze the evolution of the Norwegian sovereign wealth fund (SWF)’s ethical investment policy. The article finds that agents use their discretion to interpret the Fund’s investment policy in ways that align with its long-term mandate.

Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/bap-2014-0038 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:buspol:v:17:y:2015:i:4:p:603-631:n:2

Ordering information: This journal article can be ordered from
https://www.cambridg ... usiness-and-politics

DOI: 10.1515/bap-2014-0038

Access Statistics for this article

Business and Politics is currently edited by Vinod K. Aggarwal

More articles in Business and Politics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().