Norway’s sovereign fund, valued at $ 1.9 trillion, has announced that it has broken up in 11 Israeli companies and will end all contracts with external managers in Israel after public pressure against their war -related investments.
The pressure on Norges Bank Investment Management (NBIM) – the official name of the Fund – has increased in recent months, reflecting domestic concern with suffering in the Gaza Strip. The NBIM reported that it had shares in about 61 Israeli companies at the end of June this year.
“We are taking these measures in a very special conflict situation,” said NBIM CEO Nicolai Tangen, classifying what happens in Gaza as “a serious humanitarian crisis.” The decision follows a revision of the Ministry of Finance on NBIM investments in Israel.
The fund operates mostly as a passive manager, following indices, but with some margin for active management. NBIM has said it will end all active management in the country. Prior to sale, his stakes in Israel represented 0.1% of the fund’s total, about $ 2 billion. All shares of the 11 companies that are not part of the index have already been sold. The fund will continue to invest in some, but not all, the Israeli companies present in the reference rates.
Holder of approximately 1.5% of global actions, the NBIM historically avoids engaging in political issues, although it follows guidelines established by the Norwegian parliament, which reflect positions widely shared by society on topics such as terrestrial mines and climate change. It also has an external ethics council, which constantly evaluates the portfolio and recommends exclusions or observations.
Still, because it is the largest sovereign background in the world, NBIM attracts attention from politicians and activists. In 2022, he decided to freeze and sell his assets in Russia after the Ukraine invasion. In the same year, a government panel warned that the fund would face increasingly challenging moral dilemmas.
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A recent survey showed that 78% of respondents want the fund to exclude companies that do not respect human rights. NBIM had already excluded 11 companies due to activities in the West Bank.
Norway recognized the Palestinian state in May last year and has reiterated appeals for Israel to allow more humanitarian aid to enter Gaza.
Finance Minister Jens Stoltenberg ordered last week the revision of all Israeli investments after the AFten posing newspaper revealed that one of the companies invested, Bet Shemesh Engines, performs maintenance of used fighters in the attacks on Gaza.
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The NBIM first acquired 1.3% participation in Bet Shemesh Engines in 2023, raising the position to 2.1% the following year, according to the fund’s own information.
“The decisive factor is not really whether or not they are Israeli companies,” Stoltenberg told Oslo journalists on Monday. “The decisive factor is whether or not they contribute to violations of international law.”
The debate on the fund’s participation in Israel takes place at a sensitive time for the Labor Party, which leads the polls before next month’s parliamentary elections. The acronym criticizes the war led by Israel, claiming that it violates international law. The opposition’s Green Party called for Tangen’s resignation, while the socialist left party requires an investigation into what the government knew about investments.
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“As we are approaching an election, several parties are using it to promote their own interests and position themselves,” said Karin Thorburn, professor at the Norway School of Economics and Wharton School at the University of Pennsylvania. Still, she ponders: “No one wants the bottom of oil to become a political tool, because it creates slippery terrain.”
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