In a significant move that underscores the growing global concern over human rights violations, Norway‘s $2 trillion sovereign wealth fund has announced its decision to divest from US construction equipment giant Caterpillar.
This decision stems from the fund’s determination that Caterpillar’s products are being utilized in ways that contribute to serious human rights abuses in Gaza and the occupied West Bank.
Specifically, the fund’s council on ethics highlighted that “bulldozers manufactured by Caterpillar are being used by Israeli authorities in the widespread unlawful destruction of Palestinian property.”
Furthermore, the council emphasized that “there is no doubt that Caterpillar’s products are being used to commit extensive and systematic violations of international humanitarian law”.
The Norwegian central bank, which manages the fund, explained that the divestment was necessary due to an “unacceptable risk that the companies contribute to serious violations of the rights of individuals in situations of war and conflict”.
This move is part of a broader effort by the fund to ensure that its investments do not contribute to human rights abuses or violations of international law. The fund had previously announced its intention to divest from six companies involved in such activities, and Caterpillar is among those being divested.
Prior to the divestment, the fund held a 1.17% stake in Caterpillar, valued at approximately $2.1 billion as of June 30. This significant holding underscores the magnitude of the fund’s commitment to ethical investing and its willingness to take substantial steps to uphold human rights standards.
In addition to divesting from Caterpillar, the fund also announced its decision to divest from five Israeli banks.
These banks, including Hapoalim, Bank Leumi, Mizrahi Tefahot Bank, First International Bank of Israel, and FIBI Holdings, were identified as contributing to the maintenance of Israeli settlements in the West Bank.
The ethics council noted that these settlements “have been established in violation of international law, and their continued existence constitutes an ongoing breach of international law”. The fund’s stakes in these banks were valued at a combined $661 million.
The International Court of Justice has ruled that Israeli settlements built on Palestinian territory seized in 1967 should be dismantled “as rapidly as possible” because they “have been established and are being maintained in violation of international law”.
This ruling supports the fund’s decision to divest from companies involved in these settlements.
The recent announcement by Israel to build an illegal settlement on a 12 sq km tract of land east of Jerusalem, known as “East 1” or “E1”, has drawn widespread condemnation.
This settlement plan, which envisions 3,400 new homes for Israeli settlers, effectively cuts off most of the occupied West Bank from occupied East Jerusalem.
Israel’s far-right finance minister, Bezalel Smotrich, hailed the plan, stating it would bury the possibility of a future Palestinian state “because there is nothing to recognise and no one to recognise”.
The Norwegian fund’s decision reflects a growing trend among nations and international organizations to hold companies accountable for their role in human rights abuses.
This move also highlights the complex geopolitical dynamics at play in the Israeli-Palestinian conflict and the challenges of navigating ethical investment decisions in such contexts.
As Kiran Aziz, head of responsible investments at KLP, noted, “it has also been alleged that the company’s equipment is being used by the Israeli Defence Force in connection with its military campaign in Gaza following the Hamas attack on October 7 last year”.
This underscores the multifaceted nature of the conflict and the need for investors to carefully consider the implications of their investments.
The fund’s decision to divest from Caterpillar and the Israeli banks sends a strong message about its commitment to ethical investing and human rights.
As the global community grapples with the challenges of promoting peace and justice in conflict zones, the actions of sovereign wealth funds like Norway’s can play a significant role in shaping the future of responsible investment practices.