Norway’s $2 Trillion Wealth Fund Steps Up Divestment from Israeli Companies

Norway’s sovereign wealth fund, the world’s largest at $2 trillion, is accelerating its divestment from Israeli companies with operations in the West Bank and Gaza. This move follows an ethics review prompted by concerns over the fund’s investments in firms linked to the Israeli military and settlements in occupied territories.

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Ethical Review and Recent Divestments

On August 18, 2025, the fund announced the exclusion of six Israeli companies due to their connections to the West Bank and Gaza. While the specific companies have not been named, they will be disclosed upon completion of the divestment process, along with justifications for each exclusion.

The fund’s ethics council confirmed continued quarterly assessments of Israeli companies to monitor compliance with its ethical investment guidelines. Additionally, the fund has sold stakes in several other Israeli firms outside the ethics review, aligning with a broader decision to invest only in companies listed in its benchmark index. As of mid-August, investments in Israeli firms were valued at roughly $1.86 billion across 38 companies—down from 61 companies a few months earlier. This number is set to shrink further after the planned divestments. The fund has also terminated contracts with all external managers handling its Israeli assets.

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Background and Ethical Guidelines

The Norwegian sovereign wealth fund operates under ethical guidelines established by the Norwegian parliament. These guidelines prohibit investments in companies that contribute to serious violations of fundamental ethical norms, including those involved in the production of weapons that may be used in conflicts or those contributing to the occupation of territories deemed illegal under international law.

The fund’s ethics council has been under scrutiny for its oversight of investments in Israeli companies. Earlier this year, the council acknowledged a lapse in evaluating a supplier to Israel’s military aircraft for possible divestment, prompting a government-ordered review of Israel-related holdings.

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Political and Public Response

The fund’s divestment actions have sparked political debate within Norway. Prime Minister Jonas Gahr Støre expressed concern over certain investments, prompting the finance ministry to mandate a review of Israel-related holdings by the fund’s management. Despite political pressure, the fund’s leadership maintains that its actions adhere to its ethical mandate.

Although Norway’s parliament rejected a proposal to divest from all companies with activities in the occupied Palestinian territories, the fund has already divested from several Israeli firms and is evaluating other companies for potential exclusion.

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Future Outlook

The fund’s ethics council will continue to monitor Israeli companies quarterly. Additional divestments are expected as the fund aligns its portfolio more closely with ethical standards. The termination of contracts with external managers handling Israeli assets underscores the fund’s commitment to direct oversight of its investments.

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Conclusion

Norway’s sovereign wealth fund is intensifying its ethical review of investments in Israeli companies with operations in the West Bank and Gaza. While the fund has not divested from all Israeli companies, it is taking steps to ensure that its investments align with its ethical guidelines and the expectations of the Norwegian public. These ongoing review and divestment actions reflect the fund’s commitment to responsible investment practices and adherence to international ethical standards.