“Norway's sovereign-wealth fund, the world's largest, is selling shares of Caterpillar. The reason has nothing to do with profit or cash flow, but the war in Gaza.
The fund said there was a risk the U.S. machinery company had contributed to suffering in Palestinian territories, citing evidence Israeli authorities used its bulldozers to destroy property unlawfully. It is ditching its stakes in four Israeli banks, including the country's two largest by assets, on similar grounds.
The divestments by Norges Bank Investment Management add to evidence that the war in Gaza is leading to Israel's estrangement from Western allies.
The fund manages almost $2 trillion in stocks, bonds and other assets accumulated from Norway's oil wealth, giving it an average stake of 1.5% in all listed companies globally. Run by a former hedge-fund manager, it has a muscular approach to investing, often pushing for changes at companies it owns or selling shares on environmental, social and corporate-governance grounds.
Norway's fund held a stake of just over 1.2% in Caterpillar, valued at the equivalent of about $2.4 billion, at the end of 2024.
Caterpillar didn't respond to a request to comment.
The office of Israeli Prime Minister Benjamin Netanyahu declined to comment.
This month, the fund said it would sell 11 of the 61 Israeli companies in which it owns shares after a request by Norway's Finance Ministry to review its investments in the country.
The order followed a political outcry over reports that the fund had bought shares of an engine company that maintains Israeli jet fighters.
"Israel's growing isolation in the international community and within parts of the business community is a serious problem," said Yohanan Plesner, a former member of the Knesset who is president of the Israel Democracy Institute, a think tank. He notes however, that thus far, Israel's economy hasn't been hit by divestment moves.
Investments in Israel by Norway's oil fund have become a flashpoint ahead of elections due to take place in September. Jonas Gahr Store's Labour Party, which faces a stiff challenge from the right-wing opposition, relies on support from smaller parties to govern with a minority of parliamentary seats. Some left-wing politicians have pushed the fund to divest from Israel, or for Chief Executive Nicolai Tangen to resign.
In an interview with Swedish newspaper Dagens Industri last week, Tangen described the dispute over Israel-related investments as the worst crisis he has faced at the fund.
Politicians have historically spent the fund's returns and not gotten involved in investment decisions. The impression, that the government applied pressure over Israel, risks undermining the approach that has made the oil fund a successful investor, said Karin Thorburn, a finance professor at the Norwegian School of Economics.
The fund, one of the few huge sovereign-wealth funds in a democracy, has a complex process for deciding whether it can invest in companies on ethical grounds. It follows the advice of an independent council on ethics set up by the Finance Ministry.
The council said in a report that Caterpillar's bulldozers are sold to Israel through a U.S. government program and the company has no direct commercial relationship with the Israeli military.
Even so, the council said "there is an unacceptable risk that Caterpillar is contributing to serious violation of the rights of individuals in situations of war or conflict." The D9 bulldozers, designed for civilian use, are adapted for military applications in Israel, it said.
The fund said Monday it would also exclude Bank Leumi Le-Israel, Bank Hapoalim, First International Bank of Israel and Mizrahi Tefahot Bank.
Norway, which helped broker the Oslo Accords in the 1990s, was an early European country to recognize a Palestinian state, in May last year. "There will be no peace in the Middle East without a two-state solution," Store said at the time.
In recent months, France said it would use the U.N. General Assembly meeting this fall to follow suit, and the U.K. said it would also recognize a Palestinian state unless Israel takes "substantive steps" to end the war in Gaza.
The U.K. also imposed sanctions on Israeli government ministers Itamar Ben-Gvir and Bezalel Smotrich, citing "repeated incitements of violence against Palestinian communities."
The Trump administration has rejected the idea that recognizing a Palestinian state would help bring about a two-state solution to the decades-old conflict.” [1]
1. Norwegian Wealth Fund Drops Caterpillar. Look, Aimee; Wallace, Joe. Wall Street Journal, Eastern edition; New York, N.Y.. 27 Aug 2025: B3.
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