An IMGW News Report
Norway’s sovereign wealth fund, the world’s largest, has dropped Caterpillar and five Israeli banks from its portfolio, citing an “unacceptable risk” that the companies are complicit in human-rights violations.
The move by Norges Bank Investment Management (NBIM), which oversees asset worth around $2trn, follows recommendations from its ethics council. Caterpillar’s bulldozers, the council argued, have been used in the “widespread unlawful destruction of Palestinian property,” while the Israeli banks had provided financing for settlement activity in the West Bank – settlements deemed illegal under international law.
“For NBIM, whose sheer size makes every allocation a political act, the decision illustrates the uneasy marriage of profit and principle”
At the end of 2024, NBIM held a $2.4bn stake in Caterpillar, equivalent to about 1.2% ownership. The excluded lenders include First International Bank of Israel and its parent FIBI Holdings, Bank Leumi, Mizrahi Tefahot Bank, and Bank Hapoalim.
The decision reflects intensifying scrutiny at home. With Norway’s elections approaching, NBIM has come under political pressure to align its vast holdings with ethical principles. Nicolai Tangen, the fund’s chief executive, recently admitted to a “crisis” in confidence, acknowledging he should have raised concerns earlier about investments in Israeli defence firms.
The fund has already pledged to review its exposure to Israeli equities and cut holdings outside its benchmark index “as soon as possible.” By mid-August, its list of Israeli companies had been reduced from 56 to 38. Still, with more than half of NBIM’s equity investments in the United States, and technology stocks accounting for the lion’s share of returns, the balancing act between moral imperatives and financial performance is delicate.
Israel’s stock market has hit record highs this year despite war on multiple fronts, underscoring the paradox of ethical screens in a global portfolio. Critics note that NBIM continues to invest in firms and sectors elsewhere that face human-rights questions, from fossil fuels to authoritarian states.
Yet history suggests the fund can afford to take a stand. Academic studies show that exclusions guided by NBIM’s mandate have had little negative effect on long-term returns. As Ana Nacvalovaite of Oxford University observes, the latest divestments signal that “the mandate is applied universally, whether to U.S. industrials or Israeli lenders.”
For NBIM, whose sheer size makes every allocation a political act, the decision illustrates the uneasy marriage of profit and principle.
