Norges Bank Investment Management (NBIM) has divested its holdings in 11 Israeli companies, including Bet Shemesh Engines Holdings, which NBIM now recognises should have been classified as high-risk and excluded.

In an update yesterday (11 August), NBIM confirmed that the fund’s investments in Israel will now be limited to companies in the Government Pension Fund Global's (GPFG) equity benchmark index.

NBIM also revealed that in addition to its divestment from Bet Shemesh Engines Holdings, it has divested from 10 smaller companies based on its own risk assessment, rather than being based on a recommendation from the Council on Ethics.

These sales are part of broader efforts to simplify management and reduce risk amid the ongoing conflict in Gaza and the West Bank.

Today (12 August), NBIM CEO, Nicolai Tangen, admitted in a press conference that information about Bet Shemesh Engines Holdings should have been picked up on and the company was initially assessed as medium risk.

Bet Shemesh Engines Holdings was flagged by Norway's Ministry of Finance in a letter to the fund on 5 August as a concern, where it also ordered Norges Bank to undertake a review of the GPFG's Israeli investments.

A formal review is now ongoing, with findings to be submitted to the government by 20 August.

“In retrospect, and in light of the information we now have, we must acknowledge that the company should have been categorised as high risk and that we should have shared this information with the Council on Ethics or sold the company ourselves,” Tangen said.

NBIM also confirmed that at the beginning of last week (4 August), it brought the management of Israeli investments in-house, thereby terminating its contracts with external managers in Israel.

Tangen has indicated that further divestments from Israel will be made as part of its review.

At the end of the first half of 2025, the GPFG held shares in a total of 61 Israeli companies. NBIM revealed that the value of its Israeli investments rose from NOK 22.2bn in 2024 to NOK 22.7bn in the first half of 2025 — an increase of NOK 500m.

This growth was driven by a positive market return of NOK 2.3bn, partially offset by net trades (NOK -400m), dividends (NOK -200m), and a negative currency effect of NOK -1.2bn.

Providing further background on its Israeli investments, NBIM said that in 2023, the fund sold its Israeli government bonds. Since 2009, based on recommendations from the Council on Ethics, 11 companies have been excluded from the fund due to unacceptable risk of contribution to serious norm violations associated with business operations in the West Bank.

These decisions align with a wider Nordic trend to divest from Israel amid growing humanitarian concerns in Gaza and the occupied territories.

Commenting on the decisions, Tangen said the actions were taken in response to “extraordinary circumstances,” citing the “serious humanitarian crisis” in Gaza and worsening conditions in the West Bank.

NBIM said it has long scrutinised companies linked to war and conflict zones, continuously monitoring their risk management and respect for human rights.

The fund strengthened its expectations for companies operating in such areas in 2022 and again in 2024. Since 2020, NBIM has engaged with more than 60 companies on these issues, 39 of which are related to the West Bank and Gaza.

In the autumn of 2024, NBIM said it further intensified the monitoring of its investments in Israeli companies, leading to the sale of stakes in several firms.

Additionally, it has expanded information-sharing with the Council on Ethics regarding Israeli companies, in line with ethical guidelines.

Tangen added that the GPFG is managed on behalf of the Norwegian people and NBIM takes full responsibility for ensuring that it is managed safely and soundly.

“It is serious when questions are raised about whether the system is working," Tangen said. "We have now taken some measures, and further measures are being worked on, and we will provide more information about this in the letter we are preparing for the Ministry of Finance.

"So what happens now? Well, in line with this letter we have received, we are now conducting a very thorough review of all our investments in Israel.”

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