Norway’s $1.6T sovereign wealth fund excludes six firms linked to the West Bank and Gaza over ethical concerns in the latest Israeli investment review.
The $2 trillion wealth fund stated that once the divestitures were finished, the companies it had chosen to omit would be made public, along with the precise justifications for each one. However, it did not name the companies.
One possibility is that they include the five biggest banks in Israel, which have been examined by the fund's ethical oversight.
With the most recent exclusions, the fund has now divested from 23 Israeli companies since June 30. That figure might increase.
“More companies could be excluded,”
Finance Minister Jens Stoltenberg told reporters.
The fund's operator, Norges Bank Investment Management, stated in a letter dated Monday that as of June 30, the fund had assets in 38 Israeli firms totaling 19 billion crowns ($1.9 billion), down from 61 companies totaling 23 billion crowns.
Following rumors that the fund had acquired an interest in an Israeli jet engine firm that offers services to Israel's armed forces, including fighter jet maintenance, an immediate review was initiated this month, which led to the most recent revelation.
Ahead of the September 8 elections, the findings sparked a new discussion regarding the fund's holdings in Israel and the occupied Palestinian territories. Some parties demanded that the fund divest from all Israeli businesses, a move that the government has denied.
Norway’s parliament in June rejected a proposal for the fund to divest from all companies with activities in the occupied Palestinian territories.
“This debate helps sharpen our practices,”
said Stoltenberg.
According to Stoltenberg, in order to detect troublesome corporations more quickly, the ethics watchdog and NBIM will now communicate more frequently and more quickly.
The fund's inspector makes recommendations for ethical exclusions from the fund, but NBIM has the authority to divest from businesses if it determines that they represent an excessive risk to the fund, regardless of whether that risk is morally right or wrong.
“With more exchanges of information between the Council on Ethics and Norges Bank, it is possible that there could be more divestments of that kind in future,”
said Stoltenberg.
The fund said last Monday that it was ending its agreements with the three outside asset managers that managed a portion of its interests in Israel.
How will the fund's divestment impact Israel's military industries?
As the world’s largest sovereign wealth fund, Norway’s divestment removes significant capital from Israeli companies involved in the military sector, including those supplying the Israeli armed forces with equipment and fighter jet parts. This reduces the funding available for these companies, potentially affecting their operations and development.
The divestment sends a strong international signal condemning the involvement of these companies in the ongoing Gaza conflict. This reputational blow may discourage other institutional investors from exposure to Israeli military industries, thereby increasing financial pressure.
The decision highlights growing global scrutiny and ethical concerns over companies that support military actions in conflict zones.