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Norges Bank axes Israeli firms over activities in the West Bank

Oil fund has also divested from clothing company with garment factories in Myanmar

Note: This article was updated after publication. An inaccurate claim that Posco featured on the exclusion list of the Swedish Council of Ethics was removed.  

Norges Bank has axed two companies from the Government Pension Fund Global over their activities in the West Bank.

The world’s largest sovereign wealth fund has divested Mivne Real Estate Kd, which it says engages in letting industrial properties in Israeli settlements in the West Bank, and Shapir Engineering and Industry, which builds homes in the area. 

According to documents, the fund owned around 0.5% of Mivne and 0.1% of Shapir – shares with a value of around $15m – at the end of 2019. As usual, it sold its stocks ahead of its public announcement. 

Its decision came in response to recommendations from Norway’s Council on Ethics, which advises the €1tn oil fund on its values-based exclusions. The Council said there was “an unacceptable risk” that the two companies are “contributing to serious violations of the rights of individuals in situations of war or conflict”.

“The Council on Ethics’ position is that the Israeli settlements in the West Bank have been built in violation of international law and that their existence and constant expansion causes significant harm and disadvantage to the area’s Palestinian population”, it continued. 

“The Council on Ethics’ position is that the Israeli settlements in the West Bank have been built in violation of international law”

Conflict has flared up in Gaza and the West Bank over the past week, with the Israeli military launching airstrikes on Monday. Observers have described it as the worst violence in Israel and Gaza since 2014. 

Last month, RI reported that New Zealand’s sovereign wealth fund NZ Super had pulled its money from five Israeli banks over their financing of “the construction of unlawful Israeli settlements in the Occupied Palestinian Territories”.

Earlier this month, Michael Lynk, the UN’s Special Rapporteur on human rights in the Occupied Palestinian Territory, urged AXA to exit Israeli banks – reportedly saying “it is impossible for businesses to be economically engaged with the Israeli settlements and still respect their obligations under international human rights and humanitarian law”. AXA is understood to have $6m in four Israeli banks that allegedly finance illegal settlements in the area.

In response to the accusations, AXA told RI: "For several years, a group of activists calling for the boycott of the State of Israel has been disseminating fragmentary if not false allegations about some of the AXA Group’s investment in Israel. They accuse us of financing the production of banned weapons and the expansion of the occupied territories through investments in the industrial group Elbit Systems and in Israeli banks. In accordance with [our responsible investment] policy, the AXA Group does not finance activities nor companies subject to sanctions by international authorities. Our investments in Israeli banks have absolutely no vocation to finance the expansion of the occupied territories. Also in accordance with this policy, the AXA Group does not finance the production of weapons banned by the international law. In 2018, within the framework of our controversial weapon policy, we decided to divest from Elbit Systems when they acquired a company that manufactures cluster munitions."

Universities in the UK are also facing pressure to divest companies tied to Israeli settlements. A statement from the country’s National Union of Students last week cited data from the Palestine Solidarity Campaign on universities’ exposure to such companies. Last year the University of Manchester reportedly divested a number of firms as a result of such pressure.

Norges Bank also announced it had excluded Honeys Holdings Co – a Japanese fashion retailer – over what the Council of Ethics described as “an unacceptable risk that the company is responsible for systematic human rights abuses”. The firm owns two garment factories in Myanmar, which the Council of Ethics alleges are in violation of labour rights, with breaches including the harassment of workers, violations of fire safety, illegal use of contracts, the restriction of workers’ freedom of association.  

A military coup in Myanmar in February sparked international outrage, as democratic institutions and processes were shut down, media outlets closed, elected leaders arrested and more than 500 civilians killed. 

The latest available data from Market Screener suggests that Sweden’s €39bn pension fund Andra AP-fonden (AP2) has exited, or at least sold down, its stake in Posco International, following accusations the steelmaker has a “direct and long-term relationship with the Myanmar military or military-controlled businesses”.

The news comes just over a month after AP2 told RI it had “initiated a dialogue” with the South Korean firm on the topic. A spokesperson declined to confirm whether the fund had sold shares since beginning its dialogue with the company, saying it did not comment on individual holdings.

Market Screener data also suggests that Northern Trust Global Investments has cut its stake in Posco International. Northern Trust declined to comment. 

In March, RI reported that Dutch pension funds ABP and PFZW had come under fire from campaign group Justice For Myanmar for investing in nine companies, which allegedly have relationships with the military or companies under its control.