Norway's sovereign wealth fund announced on Monday that it had divested from U.S. construction equipment group Caterpillar, as well as five Israeli banking groups, over involvement in rights violations in Israel's military campaign in Palestine.
The five banks are Hapoalim, Bank Leumi, Mizrahi Tefahot Bank, First International Bank of Israel and FIBI Holdings, the fund said in a statement.
Fuelled by Norway's vast energy revenues, the fund is the world's biggest, with a value of nearly $2 trillion and investments in more than 8,600 companies across the globe.
The six groups were excluded "due to an unacceptable risk that the companies contribute to serious violations of the rights of individuals in situations of war and conflict," said the fund, which is operated by Norway's central bank.
Prior to its divestment, the fund held a 1.17% stake in Caterpillar valued at $2.1 billion as of June 30, its records showed.
The stakes in the five Israeli banks were valued at a combined $661 million, also as of June 30, according to fund data.
The fund said it had based its decision on a recommendation by its council on ethics.
The ethics watchdog, called the Council on Ethics, said that "in the council's assessment, there is no doubt that Caterpillar's products are being used to commit extensive and systematic violations of international humanitarian law."
Bulldozers manufactured by Caterpillar "were being used by Israeli authorities in the widespread unlawful destruction of Palestinian property," it said.
The violations were taking place both in Gaza and the West Bank, the council said, adding that "the company has also not implemented any measures to prevent such use."
"As deliveries of the relevant machinery to Israel are now set to resume, the Council considers there to be an unacceptable risk that Caterpillar is contributing to serious violations of individuals' rights in war or conflict situations."
The council, a public body set up by the Ministry of Finance, checks that firms in the portfolio of the fund meet ethical guidelines set by Norway's parliament.
It makes recommendations to the board of the central bank, which has the final say. The board agreed with the council's recommendation.
On the banks, the ethics watchdog had initially been scrutinizing Israeli banks' practice of underwriting Israeli settlers' housebuilding commitments in the region.
On Monday, the council said all the banks excluded had, "by providing financial services that are a necessary prerequisite for construction activity in Israeli settlements in the West Bank, including East Jerusalem... contributed to the maintenance of Israeli settlements."
Around 700,000 Israeli settlers live among 2.7 million Palestinians in the occupied West Bank and East Jerusalem.
Many settlements are adjacent to Palestinian areas and some Israeli firms serve both Israelis and Palestinians.
The United Nations' top court last year found that Israeli settlements built on territory seized in 1967 were illegal.
Earlier this month, the fund said it was selling out of 11 Israeli companies following reports that it had invested in an Israeli jet engine maker even as the war in Gaza raged.
The revelations led Prime Minister Jonas Gahr Store to ask Finance Minister and former NATO Secretary-General Jens Stoltenberg for a review.
