What legal criteria does Norway’s sovereign wealth fund use to divest from companies tied to the West Bank?
Executive summary
Norway’s sovereign wealth fund uses a legal-ethical framework written into parliamentary guidelines and executed by an independent Council on Ethics and Norges Bank Investment Management (NBIM) to exclude companies judged to contribute to breaches of international law in the occupied Palestinian territories; the decisive standard is whether a company poses an “unacceptable risk of complicity” in violations of international humanitarian or human rights law [1] [2]. The watchdog recommends exclusions when firms provide goods or services that materially enable settlement activity, infrastructure for settlements, surveillance or military operations, or otherwise materially contribute to the occupation; NBIM can also divest for financial‑risk reasons distinct from ethics [2] [3].
1. How the rulebook is written and who enforces it
The fund’s ethical rules are set by Norway’s parliament (the Storting), which delegates fact‑finding and advice to an independent Council on Ethics and charges NBIM—the asset manager within Norges Bank—with implementation and any portfolio sales [4] [2]. The Council on Ethics issues recommendations on whether particular companies breach the statutory ethical guidelines, and NBIM typically follows those recommendations when it excludes or sells holdings [2] [5].
2. The legal test: “unacceptable risk” of complicity in breaches of international law
Parliamentary guidance and letters from unions and civil society frame exclusions around whether a company creates an “unacceptable risk of complicity” in violating international law in the occupied territories—language repeatedly cited by the fund, unions and the ministry when urging divestment [1] [6]. The Council’s tougher, post‑2024 interpretation explicitly ties company conduct to potential breaches of international humanitarian law and human rights obligations, and uses that linkage as the legal basis for recommending exclusion [4] [2].
3. What kinds of corporate activities trigger exclusion
Practical examples offered in Council recommendations and NBIM decisions show exclusions hinge on concrete enabling activities: operating fuel stations and other infrastructure that sustains settlements, supplying telecommunications or surveillance systems used in occupied areas, providing construction or financial services that support settlement expansion, and producing weaponry that may be used in operations linked to rights abuses [2] [7] [8]. The Council explicitly cited Paz Retail and Energy’s fuel supply to settlements as contributing to their perpetuation when recommending divestment [2].
4. The decision process in practice: evidence, recommendation, and action
Cases proceed from evidence gathering—often drawing on UN databases, NGO reports and on‑the‑ground documentation—to a Council recommendation; NBIM then assesses portfolio and legal/operational implications and implements exclusions or sales, sometimes subject to ministerial requests or parliamentary debate [5] [2] [6]. NBIM has also reported that it may limit holdings to a benchmark index or terminate local asset manager contracts as part of implementing ethical guidance [9].
5. Legal limits and political constraints: no blanket ban, room for non‑ethical risk divestment
Despite activist pressure, parliament rejected a motion to bar investment in all companies with any activity in occupied territories, with government officials stressing targeted exclusions where companies "contribute to Israel’s breach of international law" rather than blanket nationality‑based divestment [10]. Separately, NBIM retains the ability to sell holdings not only for ethical breaches but if a company poses too great a financial or reputational risk to the fund—an expressly separate legal basis for divestment [3].
6. Bottom line: the distilled legal criteria
Legally, a company is vulnerable to exclusion when independent review finds credible evidence it materially enables or contributes to breaches of international humanitarian or human rights law in the West Bank or Gaza—creating an “unacceptable risk” of complicity under parliament’s ethical mandates—while NBIM can also act on non‑ethical risk grounds; the Council’s published recommendations and NBIM’s exclusions (e.g., Paz, Bezeq, Caterpillar in later cases) illustrate how those abstract legal standards are applied in specific corporate contexts [2] [7] [8] [3].