Norway’s $2 trillion sovereign wealth fund is deepening its review of investments linked to Israel, prompted by the humanitarian crisis in Gaza and the West Bank. This review, launched last week, has already resulted in the termination of contracts with certain external asset managers and the sale of holdings in multiple Israeli companies. CEO Nicolai Tangen stated that further divestments are expected as the review progresses.
Fund Sells Bet Shemesh Stake After Oversight Lapses and Ethical Risk Reassessment
The decision was set in motion after media reports revealed the fund’s 2% stake in Bet Shemesh Engines Ltd (BSEL), a company that provides maintenance services for Israeli fighter jets. The stake, acquired in November 2023 shortly after the war in Gaza began, was sold on Tuesday.
BSEL has not issued a comment on the sale. Norges Bank Investment Management (NBIM), which oversees the fund, has already sold stakes in 11 Israeli firms in recent days, although most were not named.
Tangen admitted that oversight had fallen short, explaining that meetings with BSEL focused on U.S. operations rather than the Gaza conflict. Initially rated as a “medium-risk” ethical holding, BSEL was reassessed as a “high-risk” holding in May. Tangen noted that this change should have happened earlier and that the fund should have taken back tighter control over its Israeli-related investments sooner.
Norway’s Wealth Fund Balances Global Influence, Ethical Concerns, and Strong Financial Returns
The Norwegian sovereign wealth fund is among the largest investors in the world, holding on average 1.5% of all publicly listed companies globally. It also invests in bonds, real estate, and renewable energy projects. Funded by Norway’s oil and gas revenues, the fund holds considerable influence in international markets, making its investment decisions closely observed, particularly in situations involving ethical and humanitarian concerns.
Despite the divestments and the ongoing review, the fund reported a significant profit for the first half of the year of 698 billion Norwegian crowns ($68.28 billion), achieving a 5.7% return in line with its benchmark index. Strong equity performance, especially in the financial sector, contributed to these results, showing that the fund can deliver robust financial returns while addressing sensitive geopolitical and ethical issues.
