Norway wealth fund ethics watchdog to probe companies over Gaza war

The ethics council of Norway’s $1.6 trillion wealth fund says it is investigating whether companies in which it holds shares fall outside its permitted investment guidelines due to the Israeli offensive against Palestinians in Gaza, Reuters has reported.

The world’s largest sovereign wealth fund owns 1.5 per cent of all globally-listed shares spread across 8,800 companies, and operates under ethical rules set by parliament in Oslo. Over the years it has divested from nine companies, all Israeli, due to their activities in the occupied Palestinian territories.

Svein Richard Brandtzaeg, the chair of the council, said that the war had prompted it to examine which firms were selling weapons to Israel that were being used in Gaza. It could lead to divestments if these weapons are used for “serious and systematic violations” of the rights of individuals in war or conflict, or of international rules on the conduct of war, according to the fund’s ethical guidelines.

“We are looking at this because of the seriousness of the breach of the norms that we see,” Brandtzaeg told Reuters. He did not name companies, nor say how many were being probed, but said they could be “both Israeli and non-Israeli”.

The fund is forbidden by parliament to invest in firms that make certain products as diverse as nuclear weapons, landmines, tobacco and cannabis. It can also exclude companies over their conduct, for instance involvement in human rights violations, corruption or environmental damage.

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The ethics council makes recommendations to the central bank, which often follows its advice to exclude firms, but not always. It can also put a company on notice to change its behaviour or ask the fund’s management to engage with it directly. Companies to be excluded are not named until the fund has sold the shares.

The council is also taking a fresh look at companies that could be involved in ethical breaches throughout the occupied Palestinian territories, said Brandtzaeg. “Due to the seriousness of the breach of norms, Israel is now more in focus than before.”

Israeli firms previously excluded had built roads and homes in Israeli settlements in the occupied West Bank and East Jerusalem, were letting premises built in the settlements, and provided surveillance systems for the separation wall built by Israel within the West Bank.

Brandtzaeg declined to say which companies were being investigated in that fresh push, but said they were involved in “infrastructure”.

The fund held investments worth 15 billion crowns ($1.41 billion) in Israel at the end of 2023, across 76 companies, according to fund data. They include companies involved in real estate, banks, energy and telecommunications, representing 0.1 per cent of the fund’s overall investments.

In total, some 95 companies are excluded from the fund following recommendations from the ethics council. Another 84 companies have been excluded directly by the central bank because of their dependence on coal, the most polluting fossil fuel.

Brandtzaeg, a former CEO of Norwegian aluminium producer Hydro, said his advice to companies was to read their own guidelines on human rights. “When we look into companies that are violating human rights, they have policies, declarations, everything in place, but they don’t do what they say. So, do what they say. That would be a big step forward.”

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