The ethics council of Norway's $1.6 trillion wealth fund says it is investigating whether companies in which it holds shares fall outside its permitted investment guidelines due to the war in Gaza.
The world's largest sovereign wealth fund, which owns 1.5% of the world's listed shares across 8,800 companies, operates under ethical rules set by parliament, and over the years has divested from nine companies, all Israeli, over activities in the Palestinian territories.
Svein Richard Brandtzaeg, chair of the council, said the war had prompted it to examine which firms were selling weapons to Israel that were being used in Gaza.
It could lead to divestments if these weapons are sold to a state that violates humanitarian law, according to the fund's ethical guidelines.
"We are looking at this because of the seriousness of the breach of the norms that we see," he told Reuters in an interview.
He did not name companies, nor say how many were being probed, but said they could be "both Israeli and non-Israeli."
The fund is forbidden by parliament to invest in firms that produce products including nuclear weapons, landmines, tobacco, and cannabis.
It can also exclude companies over their conduct, for instance involvement in human rights violations, corruption or environmental damage.
The council makes recommendations to the central bank, which often follows its advice to exclude firms, but not always.
It can also put a company on notice to change its behavior or ask the fund's management to engage with it directly.
Companies to be excluded are not named until the fund has sold the shares.
Council probing firms active in all Palestinian territories
The council is also taking a fresh look at companies that could be involved in ethical breaches throughout the Palestinian territories, Brandtzaeg said.
"Due to the seriousness of the breach of norms, Israel is now more in focus than before," he said.
Israeli firms previously excluded had built roads and homes in Israeli settlements in the West Bank and disputed homes in east Jerusalem, had premises there, and provided surveillance systems for the separation wall built by Israel around the West Bank.
Brandtzaeg declined to say which companies were being investigated in that fresh push, but said they were involved in "infrastructure."
The fund held investments worth 15 billion crowns ($1.41 billion) in Israel at the end of 2023, across 76 companies, according to fund data, including companies involved in real estate, banks, energy and telecommunications.
They represented 0.1% of the fund's overall investments.
Overall, some 95 companies are excluded from the fund following recommendations from the ethics council. Another 84 companies have been excluded directly by the central bank because of their dependence on coal, the most polluting fossil fuel.
Brandtzaeg, a former CEO of Norwegian aluminum producer Hydro, said his advice to companies was to read their own guidelines on human rights.
"When we look into companies that are violating human rights, they have policies, declarations, everything in place, but they don't do what they say.
"So - do what they say," he said. "That would be a big step forward." ($1 = 10.6757 Norwegian crowns)