Norway’s sovereign wealth fund, the world’s largest, will exclude another six Israeli companies with connections to the West Bank and Gaza from its portfolio following an ethics review, it said on Monday.
The $2 trillion wealth fund did not name the companies it had decided to exclude. The announcement comes one week after the fund said it was selling its investments in 11 Israeli companies over concerns about affairs in the West Bank and Gaza.
The fund launched an urgent review earlier this month after reports that it had built a stake in an Israeli jet engine group that provides services to the Israel Defense Forces, including the maintenance of fighter jets.
“We are invested in companies that operate in a country at war, and conditions in the West Bank and Gaza have recently worsened. In response, we will further strengthen our due diligence,” the fund’s CEO Nicolai Tangen said in a statement last week.
As of August 14, the fund had some $1.86 billion invested in 38 companies listed in Israel, the fund’s operator Norges Bank Investment Management said, a reduction of 23 companies since June 30.
“More companies could be excluded,” Norwegian Finance Minister Jens Stoltenberg told reporters.
The Norwegian Parliament on April 29, 2019, in Oslo. (Jonathan NACKSTRAND / AFP)
The fund said the names of the six companies in Monday’s announcement would be made public, along with specific reasons, once the divestments were completed. One possibility is that they include Israel’s five largest banks, which have been under review by the fund’s ethical watchdog.
Separately, the fund said it had also sold stakes in six other companies, following a decision last week to only hold stakes in Israeli companies that are part of the fund’s benchmark index.
Norway has seen a debate flare up about the fund’s investments in Israel, the West Bank, and Gaza ahead of elections on September 8, with some parties calling for the fund to divest from all Israeli companies, a step the government has ruled out.
Norway’s parliament in June rejected a proposal for the fund to divest from all companies with activities in the West Bank and Gaza. “This debate helps sharpen our practices,” said Stoltenberg.
The flags of (from top) Norway, South Africa, Palestine, Ireland, and Spain, are raised at an entrance of Ramallah city in the West Bank on May 28, 2024. (Zain JAAFAR / AFP)
Those pushing for divestment say only a complete withdrawal from investing in Israeli companies would protect the fund against possible ethical breaches. The sovereign wealth fund’s decisions follow Norway’s announcement last year that it would recognize a Palestinian state.
Stoltenberg said that, from now on, the fund’s ethics watchdog and its operator would have more frequent and faster exchanges of information to more rapidly identify problematic companies.
Ethical exclusions from the fund are based on recommendations from the fund’s watchdog, though the fund’s operator can also divest from companies if it assesses that a company poses too much of a risk to the fund, whether the risk is ethical or not.
“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.
Last Monday, the fund announced it was terminating contracts with all three external asset managers who handled some of its Israeli investments.
