CJFA_1_2015_przed_drukiem.pdf 65 Fiedorczuk J. (2015). Sustainable Development in Norway on the example of Government Pen- sion Fund Global. Copernican Journal of Finance & Accounting, 4(1), 45–54. http://dx.doi. org/10.12775/CJFA.2015.003 JULITA FIEDORCZUK* The Faculty of Economics and Management, University of Bialystok SUSTAINABLE DEVELOPMENT IN NORWAY ON THE EXAMPLE OF GOVERNMENT PENSION FUND GLOBAL Keywords: sustainable development, Global Government Pension Fund, Norway. J E L Classification: F39, G23, G32, H61, I31, 011, 013, 016, 021, 023, 044, Q01. Abstract: This article is an attempt to assess the functioning of the Norwegian Govern- ment Pension Fund Global in relation to the degree of implementation of the concep- t’s objectives of sustainable development. The aim of the article apart from this asses- sment is to determine significance and the benefits of the concept to the Fund and the country. To apply the hypothetical-deductive method. The concept of sustainable de- velopment has a relatively long history in Norway. Sustainable development is not just a dead regulation, but a way of thinking Norwegians. Social awareness of balance need causes of naturalness of reconciling the economic, social and environmental interest in economy. On the one hand, Fund acting within state structures, is the implemen- ting tool of sustainable development policy. On the other, the Fund uses assumptions of the concept to achieve sustainable economic benefits. Maturity sustainable activities of the Fund contributes to the achievement of competitive advantage among other funds. The Fund is the largest Government Pension Fund in the world in terms of net assets, of which the largest part of the market value is an inf low of capital from outside. Inve- stors deposit their funds in it because they trust to management style. Due to the global character, size and geographical or investment diversification, manifestation of susta- inable practices reaches to wide-spectrum of recipients. The range of message builds Date of submission: January 9, 2015; date of acceptance: February 20, 2015. * Contact information: fiedorczukjulita@uwb.edu.pl, The Faculty of Economics phone: 085 745 77 16. Julita Fiedorczuk46 the Fund and country reputation that actively suggests the only one way to sustainable development. Implementing the concept of sustainable development is the only possible way to the stable satisfy economic-social needs of the world while avoiding environ- mental degradation. Due to the fact that the decisive role in the implementation of the concept is attributed to governance1, the most sustainable economies has large state involvement in the market and the welfare state status. One of them is Norway, where all of polities and activities are subordinated by the concept of sustainable development. Also, the equality and fight against disproportions are the stimuli to create Government Pension Fund. Fund as a state institution is Norway’s image of management style and as the largest government invest- ment fund in the world is an effective communicator informing about the im- portance of applying the concept of SD. To investigate undertaken problem has been used the hypothetical-deductive method. It is assumed that the GPFG is an active performer and promoter of the concept of sustainable development. In addition, it is believed that the profound realization of the concept of sustainable development is a tool to build competi- tive advantage of Fund and Norway. The assess the implementation of the con- cept will be based on internal Fund reports2. Conclusions derived from them have been confronted with the results of the international organizations and the available literature. Due to the small number of differences in the ideology of CSR and SD at the level of assumed them to be identical3. 1 Factors is the governance dimension. 2 2010, 6) and received one of the Truman Oil solvents resistance rating of SWF Score- board. (Truman 2007, 15) It publishes and complete lists of its holdings as well as its voting records in its quarterly and annual report. The GPFG publishes the benchmark portfolios used to measure its performance against. 3 - istics than differences. Clearest ideological differences are: the level of implementation SUSTAINABLE DEVELOPMENT IN NORWAY ON THE EXAMPLE… 47 The beginning of the concept of sustainable development is considered to the in 1975. The next step was to propose the idea of sustainable development set out - ment and Development Programmes in 1987. Sustainable development on the ba- sis of the Report Brundlandt (Report 1987, 41) was defined as: ,,the development, that meets the needs of the present, without compromising the ability to meet the needs of future generations. It is based on two concepts: needs – in particular the essential needs of the poorest in the world, which should be given the high- est priority, and limitations – imposed capacity of the environment to meet the needs of present and future by the state of technology and social organization.” Satisfaction with life was equated with economic growth. For this reason, the economic growth was considered to be the most important economic ob- jective. This view has been changed since the 70s. In parallel with the increase in interest in the sustainability has been growing popularity of the concept of quality of life. This term goes above and beyond economics, as determined mul- tifaceted human satisfaction, which has to be tested through tangible and in- - nomic component of sustainable development is not significant. The guidelines of sustainable development assume that it can not be the most important. The The importance of the state in achieving and maintaining a sustainable bal- ance between the environment, human and economic prosperity is very fun- damental. The market is very efficient allocation mechanism in the event of a short term, but is not able to protect the hand of the invisible nature and hu- man satisfaction. Only the state is able to effectively manage the free goods and represent the interests of the whole community in the long term. (Chmielak 2002, 80–82) The idea of sustainable development is a relatively new global style of think- ing pointing the way to achieve sustainable development. The main purpose of the development model based on its assumptions is to maintain a balance be- of the concept (CSR – scale micro SD – the whole globe, country), the origin of creation (Jonker, Reichel, Rudnicka 2011, 41–42) and the expected time horizon (usually a long period of planning and implementation occurs in the case of sustainable development). Julita Fiedorczuk48 tween people, nature and prosperity on a global scale. In the face of globaliza- tion of economies is a growing awareness that the problem of poverty, envi- ronmental hazards or food does not end within the borders of the countries concerned. Expanding development perspective, he sees more and more clearly the needs of the future generations. Norway has been actively advocate of concept of sustainability since the pasts decades. Norway effectively implements and promotes the principle of balance between the main elements of sustainable development. Social sensitivity, widely understood egalitarianism, a sense of social justice and respect for na- ture can not be actualized only in a utopian model. The Norwegian compromise is a result of many causes: religion, culture, historical circumstances, their poli- cies and the social mood of the Norwegian society. In the ranking of the World Economic Forum in 2005 in terms of sustainable development index Norway took second place (Angel 2013, 22). The meaning of sustainable development is adopted in Norway in accord- ance with the definition of the Brundtland Report from 1987. (Indicators 2005, 6) This definition is used in Norway in all documents related to the theme of sustainable development of the country such: National Action Plan for Sus- tainable Development (2003), Norway’s Strategy for Sustainable Development (2002) and A Peer Review of Norway’s Policy for Sustainable Development or even Corporate Social Responsibility in a Global Economy (2009). Norway is the one of the richest economies in the world. Norway frequent- ly been regarded as the state with the highest level of socio-economic develop- fjords in terms of quality of life was already the leader of twelve times. Norway’s HDI was 0.955 in 2012, placing it at first place again, among the other economies (International 2014). Norway achieved result of GDP per capita about 86% high- than Switzerland, which was the next place in Norway at this time (GDP 2011). Norway is one of the first countries in the world that has established in 2009 the state document about the standards of conduct relating to Corporate Social Responsibility. (Corporate 2014). It is not surprising that the list of the 100 most sustainable corporations of 2012, the top ten were two Norwegian state companies (Statoil and Norsk Hydro) (Angel 2013, 19). SUSTAINABLE DEVELOPMENT IN NORWAY ON THE EXAMPLE… 49 Manifestation of sustainable development within the social pillar can be generalized to create for the residents the conditions of a sense of security, happiness and equality. A Scandinavian model creates the ability to implement this concept. This model consists of the mechanism of the welfare state, nordic economic policy and political and economic system. Solutions of Scandinavian model would have not achieved without the approval of Nordic society, which largely bear the cost of sustainable economy. In Norway even the state inter- vention crystallized naturally, giving a solid foundation for the so-called. “Hap- py democracy”, which similarly to sustainable development, is a political con- sensus, economic and social (Nowiak 2011, 72–77). Norway is a country maintaining very high environmental standards. They are part of the national legal order. Both the state and society treats nature as a national heritage. The environmental aspect in Norway gained strategic im- portance even before the official creation of the concept of sustainable devel- opment. In 1972, Norway was the first country in the world has created an unit Ministerial dealing with issues of responsibility for the environment. (Report No. 14, 2007) The need for the establishment of units is result of the culture and Nordic tradition, whose main purpose is to manage the entire planet so that fu- ture generations can enjoy the unchanged nature (Harrison 2003, 70, 74). The confirmation of the effectiveness of Norwegian policies is fifth posi- tion sustainable country (RebecoSAM 2013, 6) and eighth place in the world in terms of the development of the so-called green economy. Exemplification of what is the Global Green Economy Index from 2012 developed by the Dual Cit- izen (Copenhagen 2013). Norway has attained a such high results of this kind of rankings in this regard by the economic system – a combination of market economy and state intervention. Pure market mechanism is not able to imple- ment the principles of social justice. Difficulty in being self-sufficient and inde- pendent in such hard conditions, resulted in understanding the meaning of the state and institutions, which can move on some part of the responsibility and risks of satisfy all the needs of society. From the same reason society fully ac- cept applied redistribution of income and participates in the costs for the self- made construction of sense of security. Sustainable development in Norway is poured out on all areas of activity. On the basis of the Scandinavian economy sustainable action are very mature, be- cause its origins are much earlier than the beginning of concept of sustainable development. Approval for sustainability follows from previous experiences of this nation. Norwegians believe in effectiveness of counterbalance (economy- Julita Fiedorczuk50 human-nature), which does not reduce economic welfare in long term. Sustain- able initiatives are supported by the legal system, state funds devoted to their implementation and society in Norway. From the practice point of view4 Government Pension Fund Global is a tool for ensuring sustainable development in Norway and promoting it in the world. The main reason for its creation is the idea of a fair distribution of wealth be- tween generations, resulting from the scarcity of natural resources, the illu- sion resembling a definition of the concept. After the exhaustion of raw materi- als, accumulated capital can be used to finance pension obligations or be better used to mitigate the effects of the decline in budget revenues. Government Pension Fund of the biggest Government Sovereign Fund in terms of accumulated assets in the world (Sovereign 2013). In the last decade have noted a huge increase in the importance of investment funds in the finan- cial markets and their role in the global economy (Review of Finance 2013, 483). The concept of sustainable development at the level of the organization is poorly defined and represents a new approach in the management sciences (Adamczyk 2001, 32). The transformation of English literature from the sus- tainable development concept from macro and micro level is defined as a sus- based on sustainable development (sustainable corporation). According to the definition of this term is given by Banerjee is an organization that strives to increase the economic long-term value for shareholders, through the integra- tion of economic, environmental and social opportunities to increase the value of corporate strategy (Baberjee 2002, 107). In this sense, sustainable organi- zations can easily discern the four dimensions of socially responsible organi- zation, proposed by Duahlsrud (without exposed dimension of volontariness). This causes difficulty in making a clear distinction between the activities fall- ing under the implementation of the concept of corporate social responsibility and sustainable development at the level of the organization, which the Fund is. GPFG is becoming more resilient executor of the concept of SD and CSR ESG 4 - lease standing that “GPFG is financial investor, no policy tool”. SUSTAINABLE DEVELOPMENT IN NORWAY ON THE EXAMPLE… 51 OECD’s Principles of Corporate Governance and the OECD Guidelines for Mul- tinational’s Enterprises. On the basis of internal documents5 and scientific ar- ticles defining and regulating the operation of the fund can be concluded that sustainable balance is well-established legislative part of the management. The foundation for achieving the objectives of the concept has already created or- ganizational structure, which provides a secure changes and reciprocal con- trol between authorities. Advisory bodies and public consultations shall sup- port the important decisions. Priority the principles of ethical and responsible investing emphasizes by existence of independent, specially established cells The Council on Ethics. The Council makes public exclusion from the portfolio of investors who violate the security of investments by engaging in activities con- demned (corruption, the production of weapons, violations of human and chil- dren rights, actions detrimental to the environment) by the Fund. Long-term planning perspective is the way to achieve the main goal – integration of ethi- cal and financial cell. The Fund resigns of short-term profits, incurs expenses, but gaining the reputation and investors trust. The market value of the fund from 2013 years accounted for over 60% of the inf low of capital from outside (Government 2014). The expenditures for concept realization are same kind of advertising costs. Status responsible global investor increases the sense of se- curity, the market value of their assets, and thus the range of information con- firming the effectiveness of the Norwegian state-owned assets management style. This result seems to be strong than multiplying the expected accumulat- ed capital. Having experience can become a competitive advantage. The results of WWF Report from 2008 year, indicate that there are many reasons to Norwegian government naturally played a leading role in the future global investing (Innovest 2008, 70–71). Performing this function would be to being an active representative government funding and integration of tools in the government responsible investing pension funds in order to change the world economy in a more socially and environmentally sustainable. Oslo is in- dicated as potentially the world capital of socially responsible investing, due to the current consistency and naturalness responsible activities. International organizations hierarchizing Sovereign Pension Funds deem GPFG as a leader in the implementation of the concept of SD. Operation of the Fund supporting sustainable development are assessed more strictly. Fund 5 - ternal Report to the Storing (2006, 2007, 2008, 2009, 2010, 2011, 2012,2013, 2014) and Mandates GPFG, Other reports. Julita Fiedorczuk52 prompts suggestions of these organizations and improves areas identified in these analyzes. In 2008, in terms of the sustainability of improved environ- mental dimension in response to the WWF report, which indicated insufficient fund involvement in activities against climate changes. After stabilization of the economy after the financial crisis Yngve Slyngstad (2013) increased the share of investment in environmentally friendly companies to 1% of the assets, and from 2015 Investement push into renewable energy, water management considering the use of a new reporting tool called screening possitive. The Fund is a transnational institution which facilitates outgoing initiatives outside the country. This activities rely on using of sustainable development practices, sending signals about the necessity of their application by potential, current investors and observers. Compliance with the ethical rules is necessary to start co-operation with the Fund. The Fund activity is example of sustaina- ble practices, making the management model of state wealth in the face of cur- rent limitations and future needs. The Fund is a resilient executor and promot- er of sustainable development concept. Sustainable activities are very mature. When evaluating sustainable development, it is necessary to establish the Nor- wegian model because it creates the possibility to implement this concept in a very natural way. Social attitudes of equality and justice enhance awareness of the need for and importance of CSR and SD by society and the State. These factors make the use of the concept of CSR is in Norway direction of the govern- ment’s actions to improve its competitiveness in the long run. In summary, the main purpose of the article have been achieved. The concept of sustainable de- velopment is permanent way to stay competitive investor in the world. - stwem, Akademia w Krakowie, Kraków. Baberjee S. B. (2002). 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