Norway's sovereign wealth fund announced on Monday that it would divest from 11 Israeli companies, a decision that comes amid reports of its previous investments in an Israeli jet engine manufacturer during the ongoing war on Gaza.

The head of Norges Bank Investment Management (NBIM), Nicolai Tangen, stated that the divestment decision was driven by exceptional circumstances, citing the severe humanitarian crisis in Gaza. He explained that the fund holds stakes in companies operating in a conflict zone, noting the deteriorating conditions in both Gaza and the West Bank.

Tangen noted that this decision would also lessen the oversight burden on the fund's Council of Ethics by reducing the number of Israeli companies under its supervision.

Norway's sovereign wealth fund, commonly referred to as the oil fund due to its funding from the country's substantial energy export revenues, holds the title of the world's largest such fund. It boasts a staggering value of approximately $1.9 trillion, with its investments spread across more than 8,600 companies worldwide.

A report prompts far-reaching measures

A recent report by Norwegian newspaper Aftenposten revealed that the fund had invested in Israeli company Bet Shemesh Engines Holdings, a manufacturer of components for engines powering Israeli fighter jets.

Tangen later acknowledged the reports, stating that the fund had actually expanded its investment in the company after "Israel's" war on Gaza commenced.

NBIM reported that as of the end of the first half of this year, it held investments in 61 Israeli companies, with 11 of these not included in its equity benchmark index, a performance measurement tool established by Norway's Finance Ministry to evaluate the sovereign wealth fund's results.

The wealth fund further stated that it had reached a decision last week to divest all its holdings in Israeli companies excluded from the equity benchmark index, with the sales to be executed promptly.

Moving forward, NBIM clarified that the fund would only maintain investments in Israeli companies included in the equity benchmark index, while also announcing plans to internalize all externally managed Israeli investments by terminating contracts with external asset managers in "Israel". The fund stated that it had launched the review process and would deliver its conclusions prior to the August 20 deadline.

A long-standing commitment 

The fund emphasized its longstanding focus on scrutinizing companies linked to war and conflict zones, revealing that since 2020, it had engaged with over 60 corporations about such concerns, including 39 specific discussions regarding business activities connected to the West Bank and Gaza.

NBIM noted that it had increased its oversight of Israeli companies starting in fall 2024, leading to the divestment from multiple Israeli firms as a consequence of this heightened scrutiny.

During a press conference later on Monday, Jens Stoltenberg, Norway's minister of finance, said he was pleased that Norges Bank had "acted quickly," while emphasizing to reporters that "the fund's ethical guidelines stipulate that it shall not invest in companies that contribute to violations of international law by states."

"Therefore, the pension fund should not hold shares in companies that contribute to Israel's warfare in Gaza or the occupation of the West Bank," Stoltenberg emphasized.