Norwegian oil fund excludes two Israeli companies for West Bank activities

$1.3tn group cites risk linked to settlements that cause ‘significant harm’ to Palestinians

20 May 2021, Financial Times

The world’s largest sovereign wealth fund has excluded two Israeli companies for constructing and letting out buildings in Israel’s settlements in the occupied West Bank, the first time it has made such a move in almost a decade.

Norway’s $1.3tn oil fund said late on Wednesday that it had sold out of Shapir Engineering and Industry as well as Mivne Real Estate and barred them from its portfolio “due to unacceptable risk that the companies contribute to systematic violations of individuals’ rights in situations or war or conflict”.

The Council of Ethics, the independent body that advises the fund on possible exclusions, said: “Israeli settlements in the West Bank have been built in violation of international law . . . their existence and constant expansion causes significant harm and disadvantage to the area’s Palestinian population.”

Shapir is involved in the construction of homes in Israeli settlements while Mivne lets industrial real estate linked to the settlements, according to the Council of Ethics.

Its recommendations date from last year, before the recent Israeli-Palestinian conflict.

The oil fund’s exclusions over Israeli settlements comes as unrest from Israel’s recent bombardment of Gaza spread to the occupied West Bank. Israeli security forces have killed more than 20 Palestinians in the West Bank since protests erupted in the territory last week. The Israeli military has said two police offices were wounded by gunfire during protests in Ramallah and a Palestinian separately attacked security forces in Hebron with an explosive device and knife.

Israel captured the West Bank from Jordanian control in 1967 in the Six Day war. About 650,000 Israeli settlers live in the occupied West Bank, including east Jerusalem, in settlements widely considered illegal under international law. The Palestinians seek the West Bank as the heartland of a future independent state.

The oil fund, which always sells out of companies before announcing their exclusion, was a relatively small owner in both companies, owning 0.1 per cent of Shapir and 0.5 per cent of Mivne at the end of 2019, with a joint value of NKr124m ($15m).

The Council of Ethics said there was an “unacceptable risk” that both companies would continue in their activities in Israeli settlements in the future.

Neither company responded to the Norwegian body’s inquiries, and neither immediately responded to requests for comment by the FT.

The fund excluded four companies a decade ago due to connections with Israeli settlements but later removed two of them from its barred list in 2013. Activists in both Norway and Palestine have urged it to take action against more companies while also targeting other investors, such as university endowments.

The oil fund is barred by the Norwegian parliament from investing in companies that produce tobacco, nuclear weapons and coal but also excludes companies based on their conduct in areas such as environmental damage or the infringement of workers’ rights. Companies it cannot invest in include Airbus, Boeing, Glencore and RWE.

Separately, the oil fund also excluded Honeys Holdings, a Japanese women’s clothing company, due to concerns about workers’ rights at two garment factories it owns in Myanmar. The recommendation to sell out of Honeys from the Council of Ethics came last year, before February’s military coup in the south-east Asian country. Honeys could not immediately be reached for comment.