Norway Pauses Ethical Divestment by Sovereign Wealth Fund Amid U.S. Scrutiny

Latest Developments

• Parliament Agrees on Pause: Norway’s parliament voted on November 4 to pause ethical divestment by its sovereign wealth fund, the largest in the world with over $2.1 trillion in assets. The move came amidst intense scrutiny over the fund’s decision to divest from the construction firm Caterpillar over the IDF’s use of the company’s bulldozers. Norwegian Finance Minister Jens Stoltenberg told Norway’s parliament that the guidelines for ethical divestment needed reform, stating, “the world has changed since the ethical guidelines were first adopted” in 2004. Divestment recommendations will be placed on a temporary hold for a year while the funds’ guidelines are reviewed.
• Protecting Fund Is Key Aim: Stoltenberg claimed that the pause was needed to “protect” the fund. “The seven most valuable companies in the world provide 16 percent of the fund’s stock holdings. Under today’s ethical guidelines for exclusions, we must be prepared that we may no longer be able to invest in the world’s biggest companies. Then we would not remain as a broad, global index fund,” Stoltenberg assessed. Norway’s Socialist Left party decried the decision, stating that it was “without a doubt really about the fear of [U.S. President Donald] Trump’s reactions.”
• State Department Criticized Past Divestments: Following the fund’s decision to divest from Caterpillar, the U.S. State Department said that Washington was “very troubled” by the decision, adding that it appeared “to be based on illegitimate claims against Caterpillar and the Israeli government.” The sovereign wealth fund had additionally divested all its shares in Israel’s largest telecommunication company, Bezeq, in December 2024, claiming that Bezeq’s provision of services to Israeli communities in the West Bank violated its ethical standards. The move came just over two months after the Council on Ethics, the watchdog group that sets standards for the fund, adopted new rules targeting companies that conduct business in the West Bank or Gaza, as well as companies — mostly American — that produce weapons used by Israel.

FDD Expert Response

“For now, the Norwegian parliament has allayed fears that the sovereign wealth fund would be used as a political tool to pressure Israel. However, we should expect that Norway’s powerful labor unions and far-left parties, who have made the Palestinian cause a central plank of their platforms, will push back aggressively.” — Ben Cohen, Senior Analyst and Rapid Response Director

“Ethical investment is just the latest noble idea to be hijacked and weaponized against Israel and the West. The subjectivity and opacity of the review process have allowed extremists to punish companies for supporting Israeli self-defense. And the outsized focus on Israel serves as a reminder that ‘justice’ applied unequally is unjust.” — David May, Research Manager and Senior Research Analyst

FDD Background and Analysis

“‘Illegitimate Claims’: United States Condemns Norwegian Decision to Divest From American Manufacturer Over Israel Ties,” FDD Flash Brief

“Norway extends its Israel divestment campaign to the United States,” by Ben Cohen

“What’s Driving MSCI’s Anti-Israel ESG Ratings,” by Richard Goldberg

“Norwegian divestment illustrates weakness of campaign to boycott Israel,” by Orde Kittrie and David May