Norway’s sovereign wealth fund, the world’s largest, has sold all of its shares in Israel’s Bezeq, which provides telecommunications services to Israeli settlements in the occupied West Bank.
The decision, announced late on Tuesday, comes after the fund’s ethics watchdog, the Council on Ethics, adopted a new, tougher interpretation of ethics standards for businesses that aid Israel’s operations in the occupied Palestinian territories.
The $1.8-trillion fund has been an international leader in the environmental, social and governance (ESG) investment field. It owns 1.5 per cent of the world’s listed shares across 8,700 companies, and its size gives it influence.
It is the latest decision by a European financial entity to cut back links to Israeli companies or those with ties to the country, as pressure mounts from foreign governments to end the war in Gaza.
Bezeq, Israel’s largest telecom group, declined to comment.
“The company, through its physical presence and provision of telecom services to Israeli settlements in the West Bank, is helping to facilitate the maintenance and expansion of these settlements, which are illegal under international law,” the sovereign wealth fund’s watchdog said in its recommendation to divest.
“By doing so the company is itself contributing to the violation of international law.”
The Council on Ethics said it noted that the company had said it was providing telecom services to Palestinian areas in the West Bank, but that did not outweigh the fact that it was also providing services to Israeli settlements.
The watchdog makes recommendations to the board of the Norwegian central bank, which has the final say on divestments.
The advice on Bezeq was the first recommendation to divest since the watchdog toughened its policy in August. More decisions are expected.
Divestment’s impact ‘negligible’
The fund has now sold all of its stock in the company. Before that, it had cut its stake during the first half of 2024, owning 0.76 per cent of the company’s shares valued at $23.7 million at the end of June, down from a holding of 2.2 per cent at the start of the year, fund data showed.
Sources close to the company said the divestment’s impact was “negligible” as it amounted to just 0.7 per cent of the shares and that the decision was clearly a “political decision.”
They said Bezeq was allowed to provide telecom services to Jewish settlements in Area C under the 1994 Oslo Accords — which also called for the Palestinian Authority to set up its own telecom network to Palestinian areas.
“Bezeq is operating according to the Oslo agreements, so it’s a political decision,” one source said. “Of all the companies to choose [to divest] from, Bezeq should have been the last.”
In May, Norway recognized Palestine as a state, alongside Spain and Ireland.
Norway served as a facilitator in the 1992-93 talks between Israel and the Palestinian Liberation Organization that led to the Oslo Accords in 1993. Area C, which comprises about 60 per cent of the West Bank, is under full Israeli control and contains most Israeli settlements.
Israeli policies ‘conflict with international law’: watchdog
The Council on Ethics said it was aware of this but that “the situation in the area has developed in the opposite direction to that presumed by the Oslo Accords.”
“The settlements are constantly being expanded, Palestinians are constantly being driven from their homes and land areas are de facto being annexed,” it told Reuters, citing its recommendation. “Qualified discrimination and violent abuse of the Palestinian population in Area C is also taking place.”
The fund watchdog’s new definition of ethical breaches is partly based on an International Court of Justice finding in July that “the occupation itself, Israel’s settlement policy and the way Israel uses the natural resources in the areas are in conflict with international law,” according to an Aug. 30 letter it addressed to the Finance Ministry.
Since Israel’s war in Gaza began in October 2023, after the militant group Hamas led an attack into southern Israel, the council had been investigating whether more companies fall outside its permitted investment guidelines.
Before the announcement to divest, the fund had divested from nine companies operating in the West Bank.
Their operations include building roads and homes in Israeli settlements in East Jerusalem and the West Bank, and providing surveillance systems for an Israeli wall around the West Bank.
