Key Takeaways
- • Norway's sovereign wealth fund, the world's largest at around $2.3 trillion according to the source, is facing a public dilemma over whether to divest from Israeli holdings and related U.S. technology and defense-linked companies.
- • Norway's fund divested from some, but not all, of its Israeli stocks last August on the recommendation of its ethics committee, and also divested from Caterpillar over the use of its bulldozers in Gaza.
- • The Caterpillar decision drew criticism from the White House and the late Senator Lindsey Graham, who threatened retaliation against Norway.
- • In November, Norway's parliament voted to suspend part of the fund's ethical guidelines, a move Finance Minister Jens Stoltenberg said would help the fund avoid selling big tech holdings.
- • A government review of the fund's ethics guidelines is due to deliver a report imminently, though the finance ministry is not bound to follow its recommendations on the ethics committee.
Summary
Norway's sovereign wealth fund, the largest sovereign fund in the world at roughly $2.3 trillion according to The Indicator from Planet Money, is grappling with the ethics of its investments in Israel. The fund owns a small stake in about 7,000 companies, including large U.S. technology firms such as Nvidia, Apple, Amazon, Google, and JPMorgan Chase. Its investment approach is largely passive, tracking broad market indices through stocks and bonds, and it is not permitted to invest in private equity. Its CEO, Nicolai Tangen, has hosted prominent executives on his business podcast.
The fund follows the guidance of an independent ethics committee that excludes certain companies, including tobacco producers such as Philip Morris, coal miners, nuclear weapons makers, and defense contractors such as Boeing and Lockheed Martin. According to the report, the Israel-Hamas war and the humanitarian crisis in Gaza intensified the debate. Last August, the fund said it would divest from some Israeli stocks on the ethics committee's recommendation and from Caterpillar, after the Israeli government was reported to be using Caterpillar bulldozers to demolish Palestinian homes in Gaza. The issue became a factor in last year's Norwegian elections, with some voters arguing the fund was not divesting enough from Israel.
The Caterpillar decision created a diplomatic dispute. The White House and the late Senator Lindsey Graham publicly criticized Norway and threatened retaliation. Karin Thorburn, a finance professor at the NHH Norwegian School of Economics who has served on government committees on the fund's strategy, said it is difficult to determine which companies contribute to the war, noting that technology and automotive firms could be drawn in through military use of their products.
In November, Norway's parliament voted to suspend part of the ethical guidelines governing the fund. Finance Minister Jens Stoltenberg told the Financial Times the suspension would help the fund avoid having to sell big technology holdings, and he argued that excluding major tech firms would prevent the fund from remaining a broad-based sovereign investor. The government is reviewing the ethics guidelines and is due to deliver a report shortly. The fund and the Ministry of Finance declined to comment, and Thorburn said Norway is seeking to avoid political conflict over the fund.
The fund follows the guidance of an independent ethics committee that excludes certain companies, including tobacco producers such as Philip Morris, coal miners, nuclear weapons makers, and defense contractors such as Boeing and Lockheed Martin. According to the report, the Israel-Hamas war and the humanitarian crisis in Gaza intensified the debate. Last August, the fund said it would divest from some Israeli stocks on the ethics committee's recommendation and from Caterpillar, after the Israeli government was reported to be using Caterpillar bulldozers to demolish Palestinian homes in Gaza. The issue became a factor in last year's Norwegian elections, with some voters arguing the fund was not divesting enough from Israel.
The Caterpillar decision created a diplomatic dispute. The White House and the late Senator Lindsey Graham publicly criticized Norway and threatened retaliation. Karin Thorburn, a finance professor at the NHH Norwegian School of Economics who has served on government committees on the fund's strategy, said it is difficult to determine which companies contribute to the war, noting that technology and automotive firms could be drawn in through military use of their products.
In November, Norway's parliament voted to suspend part of the ethical guidelines governing the fund. Finance Minister Jens Stoltenberg told the Financial Times the suspension would help the fund avoid having to sell big technology holdings, and he argued that excluding major tech firms would prevent the fund from remaining a broad-based sovereign investor. The government is reviewing the ethics guidelines and is due to deliver a report shortly. The fund and the Ministry of Finance declined to comment, and Thorburn said Norway is seeking to avoid political conflict over the fund.
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