øystein olsen : management of the government pension fund global introductory statement by mr øystein olsen, governor of norges bank ( central bank of norway ), before the standing committee on finance and economic affairs of the storting, oslo, 2 may 2017. * * * in 2016, it was 20 years since the ministry of finance made the first capital transfer to the government petroleum fund, as the government pension fund global ( gpfg ) was aptly named at the time. this transfer marked the start of a transformation of petroleum wealth in the form of oil and gas in the ground into financial assets invested outside norway. since the first capital transfer was made, the gpfg has grown considerably, to more than 2. 5 times the size of gdp. the year 2016 also saw the first net withdrawal from the gpfg. ahead, the value of the gpfg will therefore, to a greater extent than previously, depend on the return on the fund ’ s investments. the period of steady growth in the gpfg as a share of the economy is now probably over. the key variables determining the gpfg ’ s long - term performance have been specified by the ministry of finance and approved by the storting. for its part, norges bank has developed its management assignment in accordance with the fund ’ s growth and in line with the owner ’ s mandate. at the same time, norges bank has focused on its role as advisor in the further development of the fund ’ s investment strategy. in 2016, the executive board ’ s capacity was strengthened by the appointment of a second deputy governor and an increase in the number of board members. at the end of 2016, the cumulative value of transfers to the gpfg was approximately equal to the cumulative return on the fund, reflecting the fund ’ s solid performance over time. last year, the return on the gpfg was 6. 9 percent. 1 over the period since inception, the return has averaged 5. 7 percent. adjusting for inflation and management costs, this gives an average real return of 3. 8 percent. developments in international financial markets and the growth outlook for the global economy suggest that the expected real return ahead will be somewhat lower than has been the case in recent years. the gpfg closely tracks the benchmark index ; it is invested across a broad range of countries and markets. this strategy has so far generated a solid return within the defined risk limits. restrictions imposed on the

is not my place to convince you to start financing green investment, or to buy green bonds just for the sake of it. some of you may even be skeptical about the scientific evidence for climate change, still others may doubt the ability of governments to take action. coming from an oil and gas - addicted little country below sea level, i would understand you for not believing me. but you don ’ t have to. as uniform disclosure standards start to be adopted better information will become available about the carbon intensity of companies, and how they manage their risks and prepare for a low - carbon world. information that will allow you to assess for yourselves how their valuations might change over time, and what the risk is to your capital. information that brings the horizon more sharply into focus. on this very day, 6th of june, 73 years ago as part of operation overlord 62, 000 british soldiers crossed the channel to liberate western europe from barbarism. churchill said of the normandy landings : “ this vast operation is undoubtedly the most difficult that has ever occurred. it involves tides, wind, waves, and contact with conditions which cannot be fully foreseen. ” those soldiers overcame the challenge brilliantly by showing courage, devotion and skill. and i believe this spirit is still alive and well in the british business community. it ’ s the spirit that does not walk away from a challenge, but stands up to meet it, and turns it into an opportunity. not oblivious to risk and danger, but with your minds and motives sharpened by it. aware that what is in your company ’ s interest also helps preserve a world that is rapidly changing. the challenge today is called climate change. let ’ s be aware of the risks and turn them into opportunities. ladies and gentlemen i wish you a productive, stimulating and memorable conference. thank you.