Citizens Assemblies for Stewardship Accountability
Norway is looking to its own people for advice on shaping the future of its $1.8 trillion sovereign wealth fund and how the money can be used for the benefit of current and future generations.
The details for me are not as clear as I would like them to be, but the Norwegian sovereign wealth fund is an innovation on the Mid-Century Modern social innovation of the Social Trust for the social purpose of socially provisioning the social safety net of Workforce Pensions and Civil Society Endowments, except that it is nation-based, not workforce based, and does not appear to use actuarial science so much as to aggregate Norway's national income from the extraction of hydrocarbons in its territorial waters in the North Sea to provide pensions for all Norwegians (and possibly fund other public expenditures in the public interest).
A collaboration between Nordic non-profit organizations, SoCentral and WeDo Democracy, is organizing something they are calling the Citizens Assembly for Norways future, to give the citizens of Norway a voice in how their Sovereign Wealth Fund flows the money it controls into enterprises, for their use in doing their work, for a time, at a cost and on terms
to benefit the world, ourselves and future generations
The success of this Assembly will depend in large measure on the choices of investment theses that the citizens are invited to consider.
Inherited wisdom teaches us that large, programmatic and forever social trusts like the Norwegian Sovereign Wealth Fund have two choices of investment thesis they can choose from in their prudent and loyal exercise of discretionary control over the money aggregated into their trust:
Private Equity shows us that there is, in fact, a third thesis.
Social trusts can use their vast size, programmatic purpose and forever time to use the circa 1983 vintage technologies of spreadsheet math, desktop publishing and digital communication to negotiate with enterprise of any size, in any business, anywhere on the planet.
Private Equity is a variation on the capital markets thesis of profit extraction. It uses this power to negotiate that it derives from the social trusts from which it sources its money (see Peter Drucker, Harvard Business Review 1991) to financially engineer value creation in order to extract profits through debt-funded fees and dividends, before eventual sale for profit extraction as gain-on-sale.
US Tax Credit Equity Partnerships for Affordable Housing and Renewable Energy show us that this power can also be used more socially responsibly, to financially engineer socially beneficial cash flows through negotiated agreement on:
equity payback to an actuarial/fiduciary cost of money, plus opportunistic upside, for actuarial compliance as to income ongoing into a secure future;
from enterprise cash flows prioritized by contract for suitability of the technology, longevity of the enterprise and fairness in how the business does business, under the circumstances then prevailing, for fiduciary faithfulness as to safety ongoing into a dignified future, across all six vectors of enterprise cash flow:
fairness to suppliers (Fair Trade);
fairness to communities, of place and of interest (Fair Engagement);
fairness to Nature and Society and our shared Future (Fair Reckoning);
fairness to workers, and in the workplace (Fair Working);
fairness to customers and competitors (Fair Dealing):
fairness to the savers whose savings are the original and ultimate source of the money made to flow into the enterprise by its financiers, fiduciary and otherwise (Fair Sharing).
If this innovative new investment thesis through financial engineering is included in the inventory of choices the Norwegian Sovereign Wealth Fund can choose from, then there will be much for a Citizens Assembly to consider, discuss and contribute to the development of investment themes within the investment thesis of financially engineering socially beneficial cash flows, about
who the Fund can and should be engineering with; and
what they can and should be engineering for!