Two years into Strategy 25 | Norges Bank Investment Management

We have been recognised as the world’s most transparent investment fund for two consecutive years, successfully automated significant parts of our operations, and built a more robust organisation. While we continuously strive to achieve our goal of highest possible return, we acknowledge that it takes time to foster a long-term and contrarian investment culture.

The Executive Board adopted our strategy plan for 2023-2025 in November 2022. Our ambition is clear: to be the world’s leading large investment fund. We aim to utilise the fund’s characteristics as a large and long-term investor to achieve the highest possible return in a responsible way. We encourage psychological safety, feedback and swift decision-making throughout our organisation. Not everything is easily measured, but we are confident in our direction. To succeed in a challenging, fast-paced working environment, we also believe it is important to have fun at work. As we enter the final year of this strategy period, we are excited to further enhance AI capabilities across the organisation and strengthening our efforts on long-term investing and ownership.

Read the strategy plan

Strategy 25

Performance

Norges Bank Investment Management manages the Government Pension Fund Global (the fund) on behalf of the Norwegian people. The Ministry of Finance sets the overall investment strategy through the management mandate. This mandate specifies which asset classes we can invest in, defines the benchmark index and outlines specific constraints and requirements. Within the limits of the mandate, our goal is to achieve the highest possible return in a responsible way.

The fund’s investment strategy has developed gradually over time. We contribute to this development through the Executive Board’s advisory role to the Ministry of Finance. Proximity to the portfolio and experience from the management of the fund provide valuable insights for strategic advice to the asset owner. In November 2023, responding to the Ministry’s request, the Executive Board recommended expanding the fund’s investment universe to include unlisted equities.

In April 2024, the Ministry of Finance presented their annual white paper to Parliament. Given the information currently available, the Ministry does not wish to expand the investment universe to include unlisted equities. The Ministry is of the view that it is appropriate to gather further knowledge about both financial and non-financial aspects of such investments.

Our goal is to achieve the highest possible return.

Investment strategies

Our investment management approach comprises three main strategies: market exposure, security selection, and fund allocation. These strategies are complementary and designed to capture our characteristics as a large, long-term fund. We report risk and performance across these three main strategies, implementing them across equity, fixed income, and real asset management. During 2023 and 2024, our equity investments returned 19.7 percent, fixed income returned 3.7 percent, and real estate investments returned -6.7 percent. Our unlisted renewable infrastructure investments returned -3.3 percent.

Two years into the strategy period, the fund's return has been 32 basis points lower than the benchmark index. Market exposure and security selection have contributed positively, while allocation has contributed negatively. The three strategies have different time horizons and build on different analytical frameworks. We do not expect all three strategies to generate excess return at any one time, but that they together will generate excess return over time. We manage the fund with the goal of achieving the highest possible long-term return. Since inception, the annual return on the fund has been 25 basis points higher than the return on the benchmark index that we are measured against.

One of the main goals in Strategy 25 is to promote psychological safety to build a long-term and contrarian investment culture. To support this, we have ongoing organisational performance programs to enhance performance and resilience among our portfolio managers. We have also launched a weekly virtual investment meeting open to all employees and have initiated a new project on long-term investing and ownership.

Market exposure

We manage most of the equity and fixed-income portfolio internally through our market exposure strategies. For a fund of our size, efficient portfolio management and trading are essential for minimising trading costs and maximising returns.

In 2023, we reorganised the equity trading teams and initiated a program to reduce turnover and trading costs in the equity portfolio. We have launched several initiatives utilising large language models and machine learning to help us trade smarter, better and less. These innovations enabled us to reduce transaction costs despite a significant increase in trading volume during the strategy period, enhancing our returns. We have also fully automated parts of our fixed-income trading, allowing us to focus on trades where we can add most value.
Our equity management continues to enhance returns by taking active positions around corporate actions and capital market events. We have increasingly integrated AI to improve our ability to predict index changes and to optimise the re-investments of dividends.
In fixed-income management, we have made advancements in our toolkit, particularly in the use of derivatives. Combined with team stability and refined investment processes, this has led us to set higher ambitions for excess return for our fixed-income management.
We have explored the benefits of insourcing our securities lending activities. Based on this review, we concluded to further develop the existing set-up. We also further diversified our fixed-income lending strategy to improve performance in varying market conditions and added additional counterparties for better pricing and liquidity.

Security selection

Our security selection strategies are based on fundamental research, with our direct company access serving as a unique competitive advantage.

Meaningful engagement with portfolio companies is essential for generating sustainable excess returns. By the end of 2024, we had 736 companies under internal coverage and had conducted 3,352 company meetings, most of them in person. We raised our profile with US based companies by hosting an Investor Relations seminar at our New York office. We continue to partner with selected large institutional investors to host and attend buy-side led CEO conferences, in both the US and Europe. Our commitment to building enduring company relationships earned us recognition as 'Europe's Top Management Firm' by Institutional Investor for the second consecutive year.
We have initiated targeted investment mandates that explore contrarian investment opportunities, selectively build larger stakes in companies and take sector risk after identifying trends that make us expect higher long-term returns relative to the market. We have also strengthened our forensic accounting and behavioural analysis capabilities to reduce exposure to companies we expect to underperform.
Our in-house built Investment Simulator continues to evolve with new features and data on governance and sustainability. This tool aims to improve decision making based on learning from historical strengths and weaknesses. The Investment Simulator shows that our portfolio managers are improving their ability to increase positions in quality companies and increasingly trading to their strengths, but also that more work has to be done to promote a contrarian investment culture.

We have 114 external mandates to manage around 5 percent of our equity portfolio. We use external managers in markets and segments where local knowledge and external expertise can enhance return. During 2023 and 2024, we added 17 new mandates and terminated 10.

Allocation

We mainly take two types of allocation positions to improve the overall relationship between return and risk in the fund: adjustments to the fund’s total risk profile and investments in real assets to improve diversification.

In response to increased market concentration, we have taken selective allocation positions to manage the fund’s total risk profile and capitalise on asset price variations we deem excessive. Our cautious approach to equity markets over the past two years has resulted in a negative contribution to the fund’s excess return.

In line with Strategy 25, we invest in real assets to improve diversification as part of our allocation strategy. The fund’s characteristics make us an attractive partner for unlisted investments, providing access to opportunities that might not be accessible to all investors.

We manage a real estate portfolio of 722 billion kroner consisting of both unlisted and listed real estate. In 2023 and 2024, we announced 8 unlisted real estate acquisitions, bought a large stake in the world’s largest real estate investment trust for cold storage and disposed one property. We have built a well-diversified portfolio across sectors, leveraging the flexibility and liquidity of our listed portfolio. Market challenges from Covid-19 and rising real rates have impacted our combined real estate portfolio negatively over the past years.
We continue building our unlisted renewable energy infrastructure portfolio focussing on high-quality wind and solar assets. In 2023 and 2024, we made 5 direct investments and entered our first renewable fund investment. We have expanded the investment team, which puts us in a good position to further execute on the strategy to enter new technologies. In late 2024, we merged the unlisted renewable and listed energy teams to better position ourselves to capture the opportunities and manage the risks arising from the energy transition.

Responsible investment

The management mandate requires responsible investment to be an integral part of our management of the fund. Responsible investment and active ownership support long-term value creation and our goal of highest possible return. Climate risk management is a key priority. We have a financial interest in an orderly energy transition that is in line with the Paris Agreement.

We have published new company expectations on consumer interests and sharpened our climate change expectations. We also expressed our views on responsible use of AI, corporate use of voluntary carbon credits, sustainability and corporate governance ratings, responsible corporate policy engagement and global standards for sustainability-related financial disclosures. Additionally, we expanded our climate disclosures and for the first time, also published nature risk disclosures, following the Taskforce on Nature-related Financial Disclosures (TNFD) framework.
We have enhanced our usage of governance and sustainability data to monitor corporate net zero targets and assess companies' alignment with our public expectations. Through use of AI, we now analyse and extract proprietary governance and sustainability data more effectively. To improve the measurement and reporting of our engagement progress and outcomes, we onboarded new engagement tracking software.
We continued our engagement with regulators and standard setters on sustainability issues, corporate governance and well-functioning markets. We responded to 57 consultations during the period. In collaboration with UNICEF, we published a guidance for food retailers on children’s health and nutrition rights.

We will be a global leader in responsible investment.

The second year of our climate action plan shows encouraging progress towards our goal of portfolio companies achieving net zero emissions by 2050. By the end of 2024, 2,772 companies had established science-based net zero targets, up from 1,723 in 2022. 74 percent of our financed emissions were covered by net zero 2050 targets, compared to 58 percent in 2022.
Voting remains a crucial tool for exercising influence as an owner. We introduced mid-year voting reviews to highlight trends and key issues, filed our first climate-related shareholder proposals and expanded our voting disclosure practices. We now publish voting intentions through Bloomberg and collaborated on a research study documenting that our pre-disclosures influence other shareholders’ voting decisions.
Our sustainability and corporate governance risk assessments led to 135 company divestments and 19 reinclusions in our investment universe. 81 divestment decisions involved companies entering the fund’s benchmark index.
We received the 2024 International Corporate Governance Network Global Stewardship Disclosure Award, recognising our commitment to meaningful stewardship transparency.

Technology

Technology is key to fulfilling our management assignment in a secure and robust way. Our cloud-based IT infrastructure provides flexibility and scalability. We prioritise innovation and internally developed solutions.

We have completed the transition from our old data platform to a modern, cloud-based analytical system. This new platform enhances data quality, governance and analytical capabilities while improving cross-organisational data access. 150 employees actively contribute to data development, with over 70 percent of employees regularly using the platform.
We decided to consolidate basic portfolio management and trading functionality on one platform to improve efficiency and reduce duplication and maintenance costs. Until now, this functionality has been spread across several platforms and tools. The transition will begin in 2025.
We have strengthened our cloud infrastructure and cyber security capabilities through advanced monitoring tools for vulnerability detection and incident alerts.

We will become the leading technology organisation in investment management.

We launched a new AI strategy to increase efficiency, enhance returns and improve risk management. We established a dedicated AI team to accelerate adoption and organised hackathons and tech days across offices to engage employees with emerging technologies. We have secured access to leading AI models and strengthened partnerships with language model providers to boost efficiency, creativity and innovation.
We maintain our focus on organisation-wide technology effectiveness, recognising that maximum value comes from combining business expertise with technical knowledge. More than 300 employees contribute directly to IT development, and we see significant AI adoption for improving efficiency and quality.
While we continue making technological progress, fully democratising data access has proven to take time. We will maintain focus on maximising our modern technology platform’s potential.

Operational robustness

Operational robustness is essential to achieving our goal of highest possible return securely and cost-efficiently. We maintain a comprehensive compliance and risk management framework that identifies, assesses and integrates risks into decision-making. Geopolitical uncertainty is contributing to a complex and challenging threat landscape. A strong compliance and risk management culture is crucial for an effective control environment. We will safeguard Norges Bank’s legal, tax, commercial and operational interests through appropriate legal measures.

Our core operations maintain stable performance. During the first two years of Strategy 25, we have settled 930,734 transactions and participated in 116,309 corporate actions, restructurings and related activities.
We implemented new enterprise risk management and enterprise architecture tools to enhance enterprise and operational risk management and improve our overall architecture and documentation.
We have incorporated risk management and governance of AI into our framework to ensure responsible usage and risk awareness across the organisation.
We have improved our resilience to recover IT infrastructure, systems and processes from disruptive events. We have systematically mapped critical process dependencies and conducted disaster recovery exercises for high-priority systems, while enhancing our business continuity and crisis management plans for critical functions.
We have built a threat intelligence function to further enhance our understanding of information security risk.

Our people, processes, and systems are key to safeguarding the fund's assets.

We have enhanced operational robustness by strengthening the integration of security controls into our technology processes and improving the structure and documentation of technology and data processes.
We have strengthened our monitoring and management of geopolitical risk through enhanced scenario analysis, stress testing capabilities and improved coordination with threat analysis and operational risk assessments. We have arranged a lecture series to educate employees about the evolving geopolitical landscape, great power dynamics and their economic and financial implications. We have also enhanced information sharing with the Norwegian Ministry of Foreign Affairs.
We modernised investment risk monitoring through a new internal application for mandate management and monitoring of asset classes. This streamlined approach enhances efficiency and reduces operational risk.

People

Our workforce has expanded from 572 employees in 2022 to 676 in 2024, with an additional 27 employees in wholly owned management companies. This growth mainly reflects strengthened core processes within operations, IT security, development and risk management. HR and Communications were transferred back into the organisation, enhancing collaboration. We have also built a renewable energy infrastructure team and expanded our graduate programme.
We continue building a global presence. 40 percent of employees are now based outside Oslo. We encourage international assignments to promote innovation and knowledge sharing. International mobility has increased, with 20 percent of employees undertaking assignments during the period.
We believe in lifelong learning and provide employees opportunities to develop relevant skills throughout their careers. We established an Investment Academy to boost investment skills and collaboration, arranged workshops and talks on effective learning and lecture series on key topics. We also launched a learning platform with digital courses tailored to our organisation.
Feedback is fundamental to our organisational culture and professional development. We have conducted feedback training for all employees using scenarios tailored to our organisation, and we have implemented 360-degree reviews, enabling both managers and employees to gather comprehensive feedback.
We shall be a diverse and inclusive organisation, where employees feel confident expressing opinions and learning from mistakes. 127 employees completed our Human and Team Performance programmes, led by our in-house psychology experts. These programs aim to enhance portfolio managers’ performance and resilience, encouraging contrarian thinking and resistance to avoid herd behaviour. We also established a network for mental health first aiders across our offices.

We seek to attract, develop and retain the best people.

An internal anthropology study examined our leadership culture through direct observation, participation and collaboration to examine communication, practices, behaviours and team dynamics. The resulting report provides valuable insights for cultural development.
Applications for our positions increased significantly during the first two years of the strategy period, reaching record levels for our graduate and summer internship programmes. In 2024 we received 1,142 graduate and 4,347 summer internship applications, up from 664 and 888 in 2022.
Our employee engagement survey shows high satisfaction. While challenging to measure, we see improvements in decision speed, psychological safety, feedback culture and workplace enjoyment, while reducing unnecessary bureaucracy.

Communications

Managing the fund on behalf of the Norwegian people requires transparency. Transparency builds knowledge and trust about the fund, both in Norway and internationally. In this strategy period we will place particular focus on reaching younger target groups where the knowledge of the fund is lower.

We were awarded the Global Pension Transparency Benchmark for two consecutive years, recognizing our efforts to be the most transparent investment fund in the world. In 2024, we received perfect scores across categories.
We strengthened our public presence to build understanding of the fund among audiences we may not reach otherwise. The number of internal experts sharing insights at external speaking events has grown from 70 in 2022 to 152 in 2024. Student outreach speakers increased from 39 to 72 during the same period. We support this growth with presentation resources and training.
We established our annual Investment Conference, aiming to create the number one meeting point for Norway’s asset management community. We had editorial meetings with Norwegian and international media to enhance fund knowledge. The fund appeared in 18,341 domestic and international articles during 2023 and 2024, and we contributed multiple opinion pieces on ownership issues.
We released 73 episodes of our podcast In Good Company, offering insights into our portfolio companies, their leaders and our role as an owner. In Good Company has become the most popular business podcasts in Norway, and the number of international listeners has grown significantly, particularly in the UK and the US. It has also become an important recruitment channel and improved corporate access for our portfolio managers. Total downloads have reached close to 5 million.

We will be the most transparent fund in the world.

We have strengthened our social media presence to facilitate public dialogue and launched Instagram and YouTube channels to connect with and build knowledge among younger audiences.
We have revamped our visual identify to enhance digital communications and leverage new digital tools. Our website serves as our main information hub and now attracts 2.5 million unique visitors annually. To improve accessibility, readability and searchability, we adapted our website with the latest technology and universal design standards. We have also developed a comprehensive digital reporting solution and from 2024, the fund’s holdings are updated twice a year.
Efficient internal communication is crucial to foster a high-performing organisation. We have introduced an enterprise social network to facilitate knowledge sharing and collaboration, enhanced management visibility and established quarterly global town halls rotating between offices to update employees on strategic initiatives. We launched a communications dashboard that provides real-time statistics on our activities. The dashboard is available to all employees, helping us target our efforts more strategically.

Read the strategy plan

Strategy 25