In a controversy shaking Norway’s political and financial spheres, the world’s largest sovereign wealth fund—a symbol of the nation’s ethical investment standards—has come under intense scrutiny for its stakes in Israeli companies allegedly benefiting from military actions in Gaza and the West Bank.
The spark: Norwegian newspaper Aftenposten revealed that the state oil fund, formally known as the Government Pension Fund Global and valued around $2 trillion, had increased its stake through 2024 in Bet Shemesh Engines, an Israeli company identified as maintaining aircraft used in Israel’s bombing campaigns over Gaza. At the end of 2024, the fund’s share in Bet Shemesh soared to 2.1%, valued at $15 million, up from just 0.5% in the previous year.
Finance Minister and former NATO Secretary General Jens Stoltenberg swiftly moved to address public outrage. “The war in Gaza is contrary to international law and is causing terrible suffering, so it is understandable that questions are being raised about the fund’s investments in Bet Shemesh Engines,” Stoltenberg stated, echoing the concern of many Norwegians who prize their wealth fund’s reputation for principled investing. He has ordered a comprehensive review of all Israeli holdings, instructing both the central bank (Norges Bank) and the oil fund’s Ethics Council to re-examine current positions.
Norway’s Prime Minister Jonas Gahr Støre voiced his unease, remarking that reading the details of the investments made him “very uneasy.” He called for clarity from Norges Bank to determine whether the fund has inadvertently supported companies complicit in violations of international law.
The ethical debate highlights Norway’s struggle to balance economic interests with human rights standards. The fund’s own guidelines exclude investments in companies contributing to war crimes, illegal occupations, or severe human rights abuses. Critics—from trade unions and civil society to opposition politicians—now accuse the government of hypocrisy, pointing to the near $2 billion invested in 65 Israeli firms as of late 2024, including sensitive sectors like military technology and infrastructure.
The Ethics Council, which advises the fund on divesting from problematic companies, faces its own share of criticism. The watchdog acknowledged it may have fallen short in vetting Israeli investments, particularly those tied to violence in Gaza, and promised a renewed diligence. “We should have considered whether a company servicing Israel’s fighter jets ought to be assessed for possible divestment,” the council conceded this week.
Norway’s parliament, for its part, has been divided. In June, it rejected a blanket proposal to divest from all companies active in occupied Palestinian territories, opting instead for targeted reviews. The fund has already exited positions in two Israeli companies—an energy provider and a telecom firm—following reports of their direct links to West Bank settlements and the military apparatus.
NBIM CEO Nicolai Tangen emphasized that Bet Shemesh Engines was not included in any recommended exclusion lists from the fund’s ethics council, the United Nations, or other authorities. He underscored the fund’s reliance on external managers and public information and stated that management would act on any new exclusion recommendations. Stoltenberg reaffirmed his confidence in Tangen but stressed the critical need for transparency and ethical vigilance.
This latest reckoning tests Norway’s commitment to its own ethical guidelines and its international standing, as the Gaza conflict continues to provoke outrage globally. The fund, whose holdings span nearly 9,000 companies worldwide, now faces a 15-day deadline to re-justify or reconsider its investments in Israel. The Norwegian government’s review could signal broader implications for how sovereign wealth funds intertwine geopolitics, ethical standards, and high-finance, all while under the microscope of a watchful public and a rapidly-evolving global crisis.