Norway – 12 August 2025
In a powerful and largely unprecedented move, Norway’s $2 trillion sovereign wealth fund, the world’s largest, has announced it is terminating all asset management contracts with Israeli financial institutions and has begun selling off its stakes in a number of Israeli companies. The decision, a direct response to what the fund’s management described as a “serious humanitarian crisis” in Gaza and the West Bank, marks a significant escalation in the use of ethical investing to apply political and economic pressure. The move is expected to have far-reaching diplomatic and economic consequences, and has been met with fury from the Israeli government.
The Government Pension Fund Global (GPFG), as it is officially known, is a colossal financial entity that owns approximately 1.5% of all publicly traded shares globally. Managed by Norges Bank Investment Management (NBIM), the fund operates under strict ethical guidelines set by the Norwegian government, which prohibit investments that contribute to serious human rights violations, gross corruption, or severe environmental damage. In recent years, the fund has used its immense power to divest from companies involved in a range of controversial activities, from arms manufacturing to tobacco production.
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The decision to terminate contracts with all Israeli asset managers and sell stakes in several companies follows an urgent review that was initiated last week. The review was triggered by a newspaper investigation that revealed the fund had a stake in an Israeli jet engine firm that provides parts for the Israeli military, which has been engaged in a sustained and devastating campaign in Gaza. The revelation intensified public and political pressure on the Norwegian government to take a more decisive stand against the Israeli military’s actions. The fund’s CEO, Nicolai Tangen, stated that the fund is selling its investments in 11 Israeli companies that are not included in the Norwegian Finance Ministry’s benchmark index, and that going forward, its investments in Israel will be strictly limited to those within that index.
The terminated contracts and divested shares represent a substantial financial and symbolic blow. While the total value of the divested stocks has not been disclosed, the fund’s holdings in Israeli companies were valued at around $2 billion at the end of last year. More importantly, the decision signals a significant shift in how the GPFG is interpreting its own ethical guidelines, and it sends a powerful message to the international community. The fund’s statement said the measures were a response to “extraordinary circumstances,” noting that “the situation in Gaza is a serious humanitarian crisis… and conditions in the West Bank and Gaza have recently worsened.” Norway’s Finance Minister Jens Stoltenberg praised the swift action, reiterating that the fund’s ethical guidelines “stipulate that it shall not invest in companies that contribute to violations of international law by states.”
The Israeli government’s reaction has been sharp and condemning. A spokesperson for the Israeli Foreign Ministry called the move a “moral stain” on Norway and an act of “political grandstanding” that would not affect Israel’s ability to defend itself. Israeli financial institutions and business leaders have also expressed concern, with some warning that the decision could set a precedent for other European funds and institutions to follow suit, leading to a broader economic boycott. However, some analysts in Israel downplayed the move, stating that while it is symbolically significant, the actual financial impact is minor.
The move by Norway’s wealth fund is not an isolated event. It follows a growing chorus of international criticism of the Israeli government’s conduct in Gaza and the West Bank. The fund’s decision also comes in the wake of Norway, alongside Spain and Ireland, formally recognizing the State of Palestine, a move that further underscores the country’s shifting diplomatic stance. The termination of these contracts and the divestment from specific companies represent a concrete and powerful step in that direction, moving beyond mere diplomatic statements to directly influencing financial markets. As the humanitarian crisis in Gaza deepens, the pressure on other nations and major financial institutions to follow Norway’s lead is likely to intensify, making this decision a potential watershed moment in the global response to the Israeli-Palestinian conflict.
