Norway freezes ethics council to protect U.S. tech holdings

Norway has frozen the work of its sovereign wealth fund’s council for ethics to avoid potential sell-offs of major U.S. technology companies, including Amazon, Microsoft, and Alphabet, the parent company of Google.

The government says the action is needed to protect the integrity and stability of the $2.1 trillion fund, the world’s largest sovereign wealth fund, amid escalating political tension over Israel’s war in Gaza and U.S. diplomatic pressure.

The Norwegian government’s finance minister, Jens Stoltenberg, stated on Tuesday that Norway’s parliament had passed an urgent measure to suspend the ethics council, pending the country’s review of rules for ethical investing. He said that the current system could have compelled the fund to divest from major technology companies over their alleged roles in Israeli military operations and surveillance programs.

Stoltenberg stated that an independent body could potentially compel the fund to sell its holdings in some of the world’s largest companies, noting that such a move would compromise the fund’s objectives of remaining broad and globally diversified.

Among the funds managed by Norges Bank Investment Management — an arm of Norway’s central bank that manages the Government Pension Fund Global, and which acquired shares in more than 9,000 companies, U.S. tech giants among them- Alphabet shares ranked fifth in value, behind stakes in Microsoft Corp., Apple Inc., Amazon.com Inc., and Facebook Inc. These are the top companies that account for over 15% of the fund’s combined equity holdings.

To be compelled to withdraw from them would leave the fund with a significantly more unbalanced picture globally, and the economic foundations of Norway’s state welfare arrangements, which rely on revenues from the fund for around a quarter of its annual budget, would also suffer as a result.

Tensions rise over Israel and U.S. pressure

The freeze comes after months of wrangling in Norway over how to respond to the fund’s links to Israel. It sold off shares of Caterpillar Inc. in August, after bulldozers manufactured by the company were shown to have razed Palestinian properties in the West Bank and Gaza. That decision was said to have raised alarms in Washington, where U.S. officials cautioned further exemptions aimed at American entities could put a strain on diplomatic and commercial relations.

A UN report by Special Rapporteur Francesca Albanese was published in July, adding to the pressure. The report blamed Amazon, Microsoft, and Alphabet for offering cloud services and AI technologies that grant Israel virtually government-wide access to surveillance and other sensitive databases, which could support military and security operations. The ethics council was about to consider these companies when the government intervened abruptly and halted the process.

The move was passed in parliament thanks to the support of Norway’s two largest centre-right opposition parties. Left-wing groups, who are critical allies in the passage of the national budget, wasted no time in denouncing the decision.

Critics argue that suspending the ethics council casts Norway, which has a history of principled divestments from areas such as corporations engaged in corruption, arms production, or environmental harm, as failing to uphold its reputation as a global leader in responsible investing. However, supporters argue that the fund’s primary mandate is financial stability, not moral enforcement.

Norway reassesses fund’s ethical rules

The government stated that the pause was temporary and would remain in effect until a comprehensive review of the fund’s ethical guidelines is completed in 2026.

This review will also examine whether to relax the ban on investing in defense companies, such as Boeing, Lockheed Martin, Airbus, and BAE Systems, which are currently prohibited due to their links to nuclear weapon manufacturing.

A former head of NATO, Stoltenberg, said Norway’s policy now amounted to “a paradox” because Norway relies on the protection offered by nuclear weapons as part of NATO even though its own fund is forbidden from investing in firms that make them.

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