The Norwegian sovereign wealth fund recently decided to review and reduce its holdings in companies in Israel. This move is making history as one of the most significant actions ever taken by an institutional investor, directly related to the conflict in Gaza and the West Bank. Experts say this reflects an immediate response to ethical concerns and a growing trend toward considering human rights and governance criteria in global investment strategies.
Norway reassesses its presence in Israel amid regional tensions
Norway’s $2 trillion sovereign wealth fund said on Monday it is terminating contracts with asset managers handling its Israeli investments and has divested parts of its portfolio in the country over the situation in Gaza and the West Bank. The announcement follows an urgent review launched last week following media reports that the fund had built a stake in an Israeli jet engine group that provides services to Israel’s armed forces, including the maintenance of fighter jets. “All investments in Israeli companies that have been managed by external managers will be moved in-house and managed internally,” the fund said.
The fund, an arm of Norway’s central bank, which held stakes in 61 Israeli companies as of June 30, in recent days divested stakes in 11 of these, it said in a statement, without naming the groups. “We have now completely sold out of these positions,” the fund said, adding that it continued to review Israeli companies for potential divestments.
The review will also lead to improved due diligence, it added. “The fund’s investments in Israel will now be limited to companies that are in the equity benchmark index. However, we will not be invested in all Israeli companies in the index,” it said.
Ethical criteria come into focus and change investment positions
Experts point to the Norwegian fund’s new stance as following a long-term pattern in which geopolitical and humanitarian concerns will indeed influence financial decisions. By applying stricter ethical filters to decision-making, management seeks to protect the portfolio’s reputation and align with the country’s foreign policy, even if this may sometimes mean forgoing return opportunities in strategic markets.
The fund, which owns stakes in 8,700 companies worldwide, held shares in 65 Israeli companies at the end of 2024, valued at $1.95 billion, its records show. In the last year it sold its stakes in an Israeli energy company and a telecoms group over ethics concerns, and its ethics watchdog has said it is reviewing whether to divest holdings in five banks. Norway’s parliament in June rejected a proposal for the fund to divest from all companies with activities in the occupied Palestinian territories.
Impacts on reputation and the international investment landscape
Norway’s decision sends a signal to other funds and financial institutions about the need to assess not only economic but also political and social risks when investing during times of war. According to analysts, this decision could trigger a cascade effect, encouraging asset managers around the world to review their portfolios in light of human rights and international compliance concerns.
What are the prospects for next steps in this scenario?
Norway’s current investment review focuses on Israeli companies, but this move could pave the way for similar adjustments in other conflict contexts. The fund is expected to refine its investment criteria, expanding its analysis of the social and environmental impacts that such investments may generate, and thus use its weight as the world’s largest sovereign investor to influence good corporate practices in other companies.
This financial repositioning of the Norwegian sovereign wealth fund, through this initiative, represents the role that large investors can play in promoting ethical standards for international economic relations.
GCN.com/Reuters