4 Letters

Renewed review of the application of the ethical guidelines and investments in Israeli companies

Letter to the Norwegian Ministry of Finance, dated 18 August 2025

We refer to your letter of 5 August in which the Ministry of Finance asks for an updated review of the Council’s efforts to follow-up the ethical guidelines in relation to the investments the Norwegian Government Pension Fund Global (GPFG) has in Israeli companies.

The Council on Ethics’ mandate and methodology

The Council’s work is based on the Guidelines for Observation and Exclusion of Companies from the Government Pension Fund Global.7 The Council’s task is to make recommendations to Norges Bank about GPFG-invested companies which should be excluded or placed under observation pursuant to these guidelines.

The Council must assess the future risk that companies will contribute to, or themselves be responsible for, serious violations of ethical norms, and determine whether that risk is unacceptable. This is not an overarching risk assessment based on country or business sector, but a specific assessment of each individual company’s business activities.8 As part of its monitoring of companies in the GPFG portfolio, the Council tracks relevant databases and overviews, and performs its own reviews of companies, business sectors and areas with a particularly high ethical risk. When investments that may fall under the criteria for observation or exclusion are identified, the Council first evaluates whether the alleged norm violations are serious and within the scope of the guidelines. It then assesses whether the company’s connection to these violations is sufficiently direct to warrant possible exclusion. Finally, the Council considers the likelihood that the violations – and the company’s involvement in them – will continue.9

The Council’s recommendations contain the factual information which forms the basis for exclusion, a review of how the ethical guidelines have been applied, and the Council’s assessment. In line with the guidelines, the Council must ensure that each case is thoroughly examined before issuing any advice. The Council’s work is grounded in diligence and integrity, as required by the guidelines. Because the recommendations are made public, it is essential that all information is well documented, accurate, and based on reliable and verifiable sources.

The guidelines also emphasise the principle of contradiction. Accordingly, the companies concerned are given the opportunity to provide relevant information and perspectives early in the process. When a company is considered for exclusion under the conduct‑based criteria, it also receives a draft of the recommendation before it is submitted. This thorough inquiry process, which includes several necessary steps, means that each case takes time to complete. This is true even in cases where third parties have supplied useful information to the Council.

The war in Gaza and the extensive violations of international law in the West Bank are extremely serious and require special measures from the Council. As norm violations grow more severe, companies are expected to exercise heightened due diligence, and their responsibility for contributing to such violations correspondingly increases. We believe that the measures now being presented by Norges Bank and the Council on Ethics will enable us to handle this situation more effectively, as they allow for faster identification and follow‑up of relevant cases. However, the Council cannot guarantee that it has always identified, assessed, and acted upon all relevant information. The Council’s mandate is to assess companies in which the GPFG is already invested. It therefore does not constitute a failure in the Council’s work if the portfolio contains companies that ought to be excluded. On the contrary, this is the starting point for the Council’s task. The key question is how long it could and should take to complete all steps in the assessment process. We believe that the measures described in this letter will shorten the time needed for the Council to identify and assess companies that contribute to violations of international law in Gaza and the West Bank.

The Council’s work so far in 2025

The case complex to which the Council has paid most attention over the years is the occupation of the West Bank and the war in Gaza. Of the 132 companies that have been excluded at the recommendation of the Council since 2004, 11 companies were excluded on the grounds of their contribution to Israel’s illegal occupation of the West Bank. The first company was excluded in 2009 and the latest in 2025. From 2020 to this point in 2025, the Council has assessed around 150 companies with links to areas of conflict. More than 80 of these were linked to the West Bank and Gaza.

Developments in both the war in Gaza and the occupation of the West Bank are dramatic. The norm violations have become more serious since 7 October 2023 and have deteriorated further in 2025. In recent years, therefore, the Council has heightened its expectations with respect to due diligence from companies with links to the conflict. In line with this, the Council advised Norges Bank in June and the beginning of July to exclude a further six companies which are deemed to contribute to Israel’s violation of international law. These recommendations have not yet been made public.

The steadily worsening situation has created a need for greater insight and follow-up, which has resulted in a heavier workload than the Council normally handles. In June this year, to obtain a better overview of companies’ links to the international law violations, the Council initiated a process to engage a consultant specialising in conflict areas.

The exchange of information with Norges Bank has also increased and intensified. Norges Bank has in the past week shared an overview of the Israeli companies which are currently in the GPFG’s portfolio. The Council then performed a new, provisional review of these companies. The Council immediately shared information about six of the companies with Norges Bank, as well as its internal overview of the other companies’ activities relating to Gaza and the West Bank.

A material part of the Council’s work relating to Gaza and the occupation of the West Bank concerns non-Israeli companies. A number of NGOs and others have published lists and reports on companies with links to the international law violations taking place there. These have been important sources of information for the Council, and are also key sources for consultant that offer information about companies’ business activities.

The Council has assessed a number of companies included on such lists. Most cases have been evaluated under the criterion relating to companies’ contributions to serious violations of the rights of individuals in situations of war or conflict. In these assessments, the Council has emphasised whether the companies’ activities are significant for the norm violation, whether their products or services are specifically tailored for use in the occupied territory, and whether the companies have an established presence in the area. Because the guidelines are forward‑looking, it is also materially important whether the company’s activities are expected to continue.

Some companies have been assessed under the criterion relating to the sale of weapons, while others have been evaluated under different criteria. For example, in September 2024, Norges Bank excluded General Dynamics Corp., based on the Council’s April 2024 recommendation, due to the company’s production of key components for nuclear weapons.

The day‑to‑day portfolio monitoring is regularly put out to tender, and this autumn we will enter into new contracts for these services. In the tender documents, we have already specified the need for more intensive monitoring of information reported directly by companies in which the GPFG is invested. We have also taken steps to integrate information from the portfolio‑monitoring process into our internal case‑handling system. This will strengthen our ability to follow up relevant issues more closely.

New measures and plans for the work going forward

The Council is prepared to undertake a more detailed assessment of the Israeli companies in the portfolio. We will review these companies quarterly, on the basis of various lists and other information, such as the companies’ own websites, for as long as the extraordinary situation in Gaza and the West Bank continues.

We will also perform our own reviews of public lists of non-Israeli companies. At each of our monthly meetings, we will decide how new cases should be processed further. In the past week, we have engaged in a dialogue with our consultant for news-based portfolio monitoring, with a view to ensuring that relevant information about this complex issue is communicated separately to the Council.

There is a considerable turnover of companies in the GPFG, and companies’ business operations are also constantly changing. The follow-up of companies by state authorities, for example, through export control regimes, is variable. For this reason, the Council must constantly obtain information and assess new companies and reassess companies that the Council has previously dealt with. This work is complex and wide-ranging, since there are many potential companies and several relevant exclusion criteria targeting different aspects.

To tackle the growing complexity and volume of cases, the Council will strengthen the secretariat’s capacity and allocate additional resources to assess companies linked to conflict areas. In such cases, the Council will also facilitate a faster than usual administrative process. This may, for example, be achieved by setting shorter deadlines in our dialogue with the companies being assessed.

In its annual reports for 2023 and 2024, the Council outlined its assessments of the various ways in which companies may be linked to violations of international law committed by Israel. The basis for these assessments rests on political directives stating that the threshold for exclusion from the GPFG must be high, and that not every form of connection between a company and a state’s norm violations will necessarily warrant exclusion. These directives remain unchanged. However, heightened due‑diligence requirements arising from developments in this extraordinary situation do influence the Council’s discretionary judgments. The Council is continuously evaluating whether its application of the guidelines remains appropriate in light of the extremely serious developments in Gaza and the West Bank.

The Council strives to follow up cases in a thorough and responsible manner, in line with the directives governing this arrangement. In the present situation, the Council recognises that it might have been possible to identify and assess information about certain companies earlier and more quickly. This is now being reviewed with the aim of learning from the experience and further developing the Council’s work.

Summary

The bullet-point list below sums up the steps the Council is taking to strengthen and speed up its efforts to identify and assess companies under the criteria and guidelines it administers:

• Systematic and regular review of companies linked to Israel’s occupation of the West Bank and war in Gaza.
• Updated assessment and review of companies which have previously been assessed in relation to the situation in Gaza and the West Bank.
• Strengthen the secretariat’s capacity to work on companies’ links to conflicts.
• Intensified information-sharing with Norges Bank to ensure better access to information and effective coordination of potential measures.
• Reinforced news monitoring, with a particular focus on companies and business sectors which may be involved in the conflict.
• Greater use of consultants to meet the need for increased assessment capacity.
• Internal evaluation of existing resources, processes and methods, with a view to identifying improvement points and strengthening the Council’s capacity to respond.

These measures reflect the complex situation and the serious humanitarian and human rights challenges associated with the conflict. In line with developments and the information available at any given time, the Council will constantly assess the necessity of further measures within its mandate.

The guidelines for observation and exclusion are nevertheless just one part of a shared suite of responses, with the Council and Norges Bank having different and complementary roles in the work to achieve responsible fund management. The serious and escalating situation in the conflict underscores the need for a holistic assessment of available tools in order to ensure a speedy and coordinated administrative process.

Yours sincerely,

Svein Richard Brandtzæg – Chair of the Council on Ethics