Norwegian sovereign fund anticipates withdrawals from its Israeli investment holdings
Norway's Sovereign Wealth Fund Divests from Israeli Companies Over Ethical Concerns
Norway's sovereign wealth fund, managed by Norges Bank, has taken a significant step in its investment strategy by divesting from several Israeli companies due to ethical concerns. The primary reason for this decision is the unacceptable risk of contributing to serious norm violations associated with business operations in the West Bank.
In August 2025, Norges Bank divested from 11 Israeli companies not included in its equity index benchmark. This move follows the sale of shares in 17 Israeli companies since late June, including notable firms like Paz, Azorim, Delek Motors, and El Al. The divestment affects companies both directly involved in the conflict and those indirectly supporting activities in the occupied territories.
The worsening conditions in the West Bank and Gaza, exacerbated by the ongoing conflict, have prompted Norges Bank to intensify its monitoring of investments in Israeli companies. The fund's ethics council has tightened guidelines to exclude companies deemed to assist Israeli activities in the occupied Palestinian territories.
This decision reflects a growing trend among European institutional investors to reassess Israel-related investments due to the ongoing conflict. The move could have a significant impact on Israeli companies operating in the West Bank and Gaza, as it may prompt other investors to follow suit.
Norges Bank has indicated that it will continue to monitor and assess its investments in Israeli companies on a quarterly basis, potentially leading to further divestments. Civil society groups are pressing for more comprehensive divestment, highlighting at least 30 companies that warrant exclusion under Norway's ethical investment guidelines. These efforts suggest that additional divestments could occur as the fund continues to align its investments with its ethical standards.
However, Norway's parliament recently rejected a proposal to universally divest from all Israeli companies operating in the West Bank. Despite this, the sovereign wealth fund's actions indicate a commitment to ethical investment practices, which could influence other investors globally.
The Norway sovereign wealth fund, the world's largest, expects more withdrawals from its Israeli portfolio. The fund, which invests the Norwegian state's revenue from oil and gas production, is one of the world's largest investors. It owns on average 1.5% of all listed stocks worldwide and also invests in bonds, real estate, and renewable energy projects.
The overall return for the first half of the year was 5.7%, in line with its benchmark index. The fund has terminated contracts with external asset managers handling some of its investments in Israeli companies and has brought all investments in Israeli companies that had been managed externally in-house.
The situation remains fluid, with the Finance Ministry having requested a review of NBIM's implementation of the management mandate of the fund, its investments in Israeli companies, and to propose new measures. The fund has divested parts of its portfolio in Israel due to the deteriorating humanitarian crisis in Gaza.
In recent days, NBIM has divested stakes in 11 Israeli companies, including BSEL, but did not name the other companies. BSEL provides services to Israel's armed forces, including the maintenance of fighter jets. The fund posted a 698 billion Norwegian crowns ($68.28 billion) profit for the first half of the year, with the result driven by good returns in the stock market, particularly in the financial sector.
As of June 30, Norges Bank Investment Management held stakes in 61 Israeli companies. The review of BSEL as a high-risk stock began last week, and the fund should have had a tighter overview of these investments earlier, according to Nicolai Tangen, the fund's chief executive. Tangen stated that they expect to divest from more companies.
The divestment by Norway's sovereign wealth fund from Israeli companies marks a significant shift in investment strategies, driven by ethical concerns over activities in the occupied Palestinian territories. The ongoing monitoring and potential for further divestment could have lasting impacts on both Israeli companies and global investment practices.
- The ongoing trend among European institutional investors includes reassessing Israel-related investments, reflecting growing concerns over the conflict.
- Norges Bank's ethics council has tightened guidelines to exclude companies deemed to assist Israeli activities in the occupied Palestinian territories.
- The Norway sovereign wealth fund, the world's largest, recently divested from several Israeli companies, citing ethical concerns as the primary reason.
- The worsening conditions in the West Bank and Gaza have prompted Norges Bank to intensify its monitoring of investments in Israeli companies.
- In recent days, NBIM has divested stakes in 11 Israeli companies, including BSEL, which provides services to Israel's armed forces.
- Despite Norway's parliament recently rejecting a proposal to universally divest from all Israeli companies operating in the West Bank, the sovereign wealth fund's actions indicate a commitment to ethical investment practices.
- The situation remains fluid, with Norges Bank Investment Management holding stakes in 61 Israeli companies as of June 30, and additional divestments possible.
- The divestment of Israeli companies by the Norway sovereign wealth fund could have a significant impact on global investment practices and may prompt other investors to follow suit.
