3 Selected issues

3.1 The Council’s working methods

The selection of companies for assessment

The Council constantly monitors whether GPFG-invested companies engage in business practices which may lead to their exclusion pursuant to the ethical guidelines. Two portfolio monitoring services sift out relevant information about product-related, weapons sales and conduct-related cases from media sources, publicly available databases etc. The Council assesses every company identified in relation to the product-related criteria. With respect to the conduct-related criteria, which covers many cases of a highly divergent nature, the Council assesses those where the risk of the company causing or contributing to serious norm violations seems to be greatest.

The Council also monitors a number of databases and websites containing information on, for example, corruption, weapons sales or activity in areas of war or conflict. This ensures that we identify the most serious cases where public information is readily available. The Council also receives requests to consider specific cases from organisations and individuals. These requests may be made directly or be passed on by Norges Bank.

To pick up on cases that are not necessarily covered by the news monitoring process, the Council also examines specific areas where there is a high risk of serious norm violations that are encompassed by the ethical guidelines. In 2024, the Council commissioned the production of two reports about companies in individual countries with a high risk of migrant workers’ rights being violated. The Council also surveyed companies whose operations impact intact areas of nature in biodiversity hotspots.

Furthermore, the Council monitors issues that have previously led to the exclusion of companies and where new, similar cases may arise. Examples include beaching (the process of running ships aground on beaches so they can be broken up for scrap) and the extraction of natural resources in Western Sahara.

Members of the Council’s secretariat perform an initial assessment of each case. In this assessment, emphasis is placed on the seriousness and scope of the norm violations in question, the closeness of the company’s links to the norm violation and the likelihood of the norm violation continuing in the future. The secretariat then presents the cases to the Council, which decides whether further investigation is warranted. During the course of a year, the Council normally has a couple of hundred cases under assessment.

Particularly serious new cases are given priority. These may be cases linked to escalating conflicts or serious individual incidents in which GPFG-invested companies are involved.

Figur 3.1 A typical evaluation process for conduct-related cases

Assessment and dialogue with companies

The Council’s decision to proceed with a case triggers a thorough investigation into the allegations levelled at the company. The secretariat obtains further information through conversations with experts and from open sources. In some cases, we also use consultants in order, for example, to investigate working conditions or the environmental impact of companies’ activities.

Early in the investigative process, we send a letter to the company concerned containing questions about the matter at hand. To optimise communications with these companies, we coordinate with Norges Bank, which notifies those with which it already has well-established relations. Some companies provide a lot of information, although responses vary considerably. Some companies do not respond at all.

After our initial contact with the company, the secretariat presents all relevant information to the Council, which decides which cases should be investigated further and which should be closed. Cases may be closed at any stage in the assessment. This may take place if a company has discontinued the activities which could constitute grounds for exclusion, or if the activity proves to be of a different nature than initially presumed. Some cases are closed because the companies exit the GPFG’s investment portfolio independently of the Council.

According to the ethical guidelines, companies assessed under the conduct-related criteria must be given the opportunity to comment on a draft recommendation to exclude them or place them under observation. Many companies provide additional information, while some also ask for a meeting with the Council.

Although the majority of such meetings are carried out as videoconferences, some company representatives come to Oslo, or we visit the company’s offices. Videoconferences save on resources, while face-to-face physical meetings often provide deeper insight and greater opportunities for the Council to present its points of view. The secretariat arranges the meetings, which are generally also attended by several Council members. Dialogue with the companies is an important part of the assessment process but can also prolong it.

Some companies notify us of measures they have taken to change their operations, often after receiving a draft recommendation for their exclusion. In such cases, the Council may choose to quietly monitor developments in the company or recommend that it be placed under formal observation. The Council assesses each case with an open mind and does not embark on an assessment with the objective of excluding the company concerned. The outcome is not given at the outset.

A recommendation is issued to Norges Bank

Finally, the Council issues Norges Bank with a recommendation to exclude the company concerned or place it under observation. Norges Bank then makes a final decision on the matter. If the decision involves exclusion, all shares and securities relating to the company are divested. Divestment may take several months, and the Bank publishes its decision only when this process has been completed. Simultaneously, the Council makes its recommendation public. Both decisions and recommendations are published irrespective of whether or not Norges Bank abides by the Council’s recommendation.

3.2 Conflict in the West Bank and Gaza

In June 2024, the Ministry of Finance asked the Council to provide an account of its work with respect to companies with business activities linked to the Occupied Palestinian Territories (OPT). The Council submitted its account in a letter to the Ministry dated 30 August. The letter is available on the Council’s website (etikkradet.no).

An important part of the Council’s work in 2024 has consisted of examining companies’ business activities in the West Bank and Gaza. In relation to Gaza, the Council has assessed companies’ sales to Israel of weapons used in the war in Gaza. With respect to the West Bank, attention has been directed at the role of companies in contributing to the establishment or maintenance of Israeli settlements and occupation of the West Bank in violation of international law. Questions arising in relation to Gaza and the West Bank are in general covered by different sections of the GPFG’s ethical guidelines.

Companies’ sales of weapons used in Gaza

Section 4(c) of the ethical guidelines encompasses the « sale of weapons to states engaged in armed conflict that use the weapons in ways that constitute serious and systematic violations of the international rules on the conduct of hostilities .»

When the guideline was introduced, the following conditions for its scope were set out:

The sale must be ongoing or at least recent. The criterion is not meant to impact the GPFG’s investments in companies on the basis of sales that were finalized years back.

The criterion applies to the sale of weapons from a company to a belligerent state and will not, in principle, apply to weapons transferred between states.

The criterion is intended for types of weapons that may expose civilians to harm. This entails that companies in the business of e.g. air defence systems or weapons primarily intended for use against naval targets will not be a primordial focus, nor the sale of transport aircraft or various types of military vehicles.

In other words, the guidelines do not imply that the GPFG must exclude companies due to the sale of any type of weapon or military materiel to a state, even if that state uses weapons in violation of the international rules on the conduct of hostilities. Each weapon sale must be assessed individually in light of the ethical guidelines wording and its preparatory work.

Based on data from the Swedish International Peace Research Institute (SIPRI) among others, the Council has assessed 14 recent weapons deliveries to Israel. The review showed that the companies involved in the sale of weapons that may notably impact civilians have already been excluded from investment by the GPFG for other reasons.

The Council has been in contact with two weapons manufacturers, one German and one from the US. Neither company had any ongoing deliveries of relevant weapon types to Israel. If new contracts regarding weapons deliveries are published, the Council will investigate whether this may fall within the scope of the criterion.

Companies with business activities linked to the West Bank

The Council’s point of departure is that the Israeli settlements in the West Bank are unlawful under international law. A total of ten companies have so far been excluded from investment by the GPFG at the Council’s recommendation on the basis of their activities in such settlements. The first companies were excluded in 2009, when a construction company involved in the building of Israeli settlements and a company supplying surveillance equipment for the separation barrier were excluded. At the time, the Council considered that these types of business operations to the largest extent contributed to the illegal transfer of Israeli citizens to the OPT, and therefore qualified for exclusion from the GPFG. Following the recommendation of the Council, further companies were excluded from investment by the GPFG on the grounds of similar activities in the West Bank in 2011, 2013, 2021 and 2024.

A number of companies in the GPFG’s portfolio may, in various ways and to various degrees, be linked to Israel’s occupation of the West Bank. Examples include services supplied to the Israeli settlements, or products that are used for purposes that violate international law. Over half a million Israelis currently live in settlements in the West Bank and East Jerusalem. All goods and services offered in Israel are, in principle, also available to the inhabitants of the settlements. A large number of companies may therefore be said to have links to the occupation of the West Bank in one way or another. It is difficult to provide any estimate of how many companies this concerns, as the number will vary greatly with the type of linkage envisaged.

The threshold for excluding companies from the Fund based on the ethical guidelines is high by intention. This point was elaborated in detail when the guidelines were first adopted and has been repeated in several subsequent white papers on the management of the GPFG. The Council therefore presumes that the guidelines are not intended to result in the exclusion from the GPFG of companies with any or all forms of association with violations of international law, either in the West Bank or in other conflict areas. An important factor in the Council’s assessment is whether the activities of a given company are a prerequisite for the international law violation to occur. Furthermore, it must be likely that the companies’ activities or links to activities which may constitute grounds for exclusion will continue into the future. The Council also attributes weight to the nature of a company’s contribution, e.g. whether it is sporadic or resulting from a permanent presence in the occupied territory. Moreover, the Council will assess whether a company manufactures and sells purely generic products or products and services especially adapted for use in the area. It has also been important for the Council to establish a practice that is consistent with the assessment of companies’ contributions to similar norm violations in other areas of occupation or armed conflict.

There are various lists and overviews linking companies to the occupation of the West Bank and Israeli settlements in the OPT. From 2019, the UN’s Office of the High Commissioner for Human Rights (OHCHR) entertains a list of companies linked to the Israeli settlements. The Initiative Don’t Buy Into Occupation has published annual reports on financial institutions’ investments in companies linked to the occupation since 2021, and the Israeli organisation WhoProfits publishes a database listing several hundred companies which, in various ways, may be linked to the occupation. Such overviews are a useful starting point for the Council’s assessments.

The Council’s efforts primarily involve clarifying the companies’ link to ongoing norm violations and assessing whether their role qualifies for exclusion. In 2024, the Council assessed around 65 companies in the GPFG’s portfolio. We contacted 16 of these companies and met with four. The companies engage in the following business areas:

• Energy supply
• Infrastructure construction (roads, railways, telecommunications)
• Manufacture of construction equipment and vehicles
• Banking and finance
• Travel and tourism
• Surveillance and control systems
• Extraction of natural resources
• Various forms of commercial activity in Israeli settlements

Two companies have so far been recommended for exclusion as a result of this review. They are companies involved with business operations within critical infrastructure. These companies are present in the settlements with their own business operations and supply products and services that are necessary for the continued existence of the settlements.

The Council has concluded that the majority of companies reviewed do not meet the threshold for exclusion in the ethical guidelines of the GPFG for two main reasons:

In some cases, the Council’s investigations and dialogue with the companies have shown that their operations in the West Bank have ceased, even though they are listed by some entities as doing business there. In a couple of cases, companies have conveyed that they will discontinue their operations in the occupied territory. In such cases, the Council has decided to monitor the developments going forward.

However, in most cases where the Council has not recommended exclusion, it is because the companies’ activities are not considered to fall within the scope of the GPFG’s ethical guidelines.

The Council assesses the companies’ contribution to serious violations of international law in the West Bank. In the Council’s view, some of the companies’ operations have little significance for the violations taking place. Other companies produce generic, mass-produced items that are sold in Israel and used for a variety of purposes also in the West Bank. In such cases, several factors have influenced the Council’s assessment. On the one hand, norms have evolved such that there is a greater expectation that companies take responsibility for their entire supply chains. On the other hand, how products are used may be outside the manufacturer’s control, and the link between product and company may diminish over time. This may occur if, for example, there are multiple sales and distribution levels from producer to end-user, or if products are used for many years after they were produced, or if they are sold in the second-hand market. The Council’s assessment to date has been that the threshold for excluding a manufacturer of generic products, such as construction machinery or IT equipment, on the grounds that the company’s products are used in the West Bank must be quite high. If products are closely associated with norm violations or are specifically designed to support norm violations in the West Bank, the Council will assess the matter on a case-by-case basis.

Examples of the Council’s assessments

The Council has previously recommended the exclusion of construction companies building roads and settlements in the West Bank. However, it considers that the producers of generic materials used in such construction projects should not be excluded. The distinction resides, in part, in the fact that construction companies provide a customised service and are themselves present in the occupied territory. A producer of building materials to the contrary participates in the construction to a lesser extent and has less control over how its products are used. The same applies to manufacturers of agricultural machinery, fertiliser and irrigation equipment used in some settlements.

Similar assessments apply to a number of companies which may be linked to the occupation of the West Bank only through the sale of generic products. Although, for example, the Israeli police force and other Israeli authorities in the West Bank use vehicles of a certain make, the Council does not consider that this is sufficient grounds to exclude the carmaker from investment by the GPFG. In this context, vehicles must be considered generic products that are sold worldwide. The same assessment applies, for example, to producers of generic electronics and IT equipment. However, the Council will assess companies supplying specially adapted products and services in a different manner. Thus, in 2009, the Council recommended the exclusion of a company which supplied specially developed surveillance equipment to Israel’s separation barrier.

The Council has also assessed companies selling construction machinery that contractors may use for the construction of settlements in the West Bank or the demolition of Palestinian homes. In principle, construction machinery are generic products that can be used for a wide range of purposes and for many years after they were made, and there is a large second-hand market for such equipment. The Council has discussed this issue with several manufacturers of construction machinery. They have all communicated that they do not wish to contribute to illegal actions but that they have limited influence over their products’ future day-to-day use. Nevertheless, companies approach this issue in slightly different ways. The extent of their policies and efforts in this area also vary. So far, the Council has chosen not to recommend the exclusion of such companies primarily because it is difficult to establish a clear line of responsibility between a construction machinery’s manufacturer and its end user. The Council is also consciously refraining from applying a different and more stringent standard to companies operating in Israel compared to those operating in other countries where violations of international law of a similar gravity are taking place.

Furthermore, the Council has assessed companies supplying food products to the settlements. International law requires that the fundamental needs of all civilians in an occupied territory be met, irrespective of the occupation’s legality. This includes food and medicines, and also applies to the occupying power’s own civilian population. The Council therefore considers that supplying Israeli settlements with food products does not constitute grounds for exclusion from investment by the GPFG.

The Council has also assessed GPFG-invested companies engaging in tourism in the West Bank, both companies organising package tours to the occupied territory and to those facilitating overnight accommodation in Israeli settlements. The Council considers that the companies acting as tour operators have a limited presence in the territories and that their activities do not materially contribute to the continued existence of the settlements or the overall occupation. Similarly, the Council finds that online services which facilitate overnight accommodation in the settlements do not make such a material contribution to the occupation that they fall within the scope of the ethical guidelines.

Continuation of the work in 2025

An important part of the Council’s work is to assess companies operating in areas of conflict. The Council will therefore continue its efforts to investigate companies’ links to norm violations in the West Bank. In line with established practice, the Council takes the position that companies operating in areas of conflict must exercise a higher level of due diligence. The due diligence requirement is heightened when the norm violations are more serious. The situation is dynamic, in that the GPFG’s portfolio of companies, these companies’ operations and the situation in the area are constantly changing. Over time, the fundamental norms that the Council abides by have also evolved. Here, as elsewhere, the Council will make an individual assessment of each company’s links with the ongoing norm violations and the risk of it contributing to future norm violations and will evaluate its findings in light of the GPFG’s ethical guidelines.

3.3 Biodiversity

Biodiversity is the variety of all living things and their interactions; in other words, the variety of ecosystems, species and genetic variations with species, as well as the ecological links between these components. 1

In 2019, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) concluded that biodiversity on Earth is being lost at a faster rate than ever before in human history, and that this loss of nature is due to human activity. 2 The main threats to biodiversity are the loss or degradation of habitats, overexploitation of natural resources (overfishing, overhunting and overharvesting), climate change and invasive, non-native species. Over the past 50 years, the pressure on nature from these factors has intensified. While climate change is itself a growing threat, due to rising temperatures, extreme weather events and ocean acidification, for example, it can also accelerate other threats. 3

Loss of biodiversity has major adverse impacts on ecosystems and the essential services and benefits that these systems provide to us humans. The 2022 Kunming-Montreal Global Biodiversity Framework (GBF) states that «Biodiversity is fundamental to human well-being, a healthy planet, and economic prosperity for all people.» 4

For many years, the Council has worked on cases where loss of biodiversity has constituted grounds for exclusion from investment by the GPFG. Forestry companies and plantation operators have been excluded when large areas of tropical forest that were in good condition have been destroyed. This is because deforestation is one of the greatest threats to ecosystems and biodiversity, and because tropical forests are particularly valuable. Companies engaged in operations which may harm World Heritage Sites have also been excluded from investment by the GPFG. UNESCO World Heritage Sites are designated as such pursuant to the World Heritage Convention due to their outstanding universal value to natural heritage, which may relate to landscapes, geology, ecosystems and/or biodiversity. Universal value implies importance in a global perspective, not merely regional or national importance.

In recent years, the sum of knowledge about biodiversity has increased, and international agreements in the field have been signed. This is changing what is considered acceptable practice for companies that impact biodiversity. Both the status summaries published by IPBES and the GBF from 2022 conclude that loss of biodiversity must be stopped and reversed. Although the GBF primarily addresses nation states, the Council considers that companies must also strive towards the framework’s goals. This implies that the loss of both areas of great significance for biodiversity and ecosystems of high integrity must be reduced to practically zero by 2030. Examples of areas that are important for biodiversity include areas with high species diversity, endangered species, unique (endemic) species or threatened ecoregions. The Council expects that companies exercise a high level of due diligence when they plan activities in areas deemed to be important for biodiversity.

The Council also attaches importance to the GBF’s expectations that businesses and financial institutions will contribute to the reduction of nature loss. Major international companies and financial institutions are therefore expected to monitor and assess their risks, as well as their biodiversity-related dependencies and impacts, and make this information publicly available.

Neither biodiversity nor human impact is equally distributed across the globe. Some areas are therefore more important than others for the conservation of biodiversity. When assessing companies’ activities, the Council will, for example, attach importance to whether they take place in wilderness areas . Wilderness areas are vast areas of contiguous, intact forest with little human activity. Some of these areas, such as the rainforests of the Amazon and New Guinea, are defined as high biodiversity wilderness areas . 5 Such areas act as a safety net for biodiversity because of their size and because they host many endemic species (i.e. species that are found only in that location). The Council considers that companies should, in some cases and in some areas, refrain from intervening in the natural landscape, since this could seriously harm global biodiversity.

To prioritise areas where conservation measures would have the greatest impact, the British biologist Norman Myers introduced the concept of biodiversity hotspots in 1988. 6 Biodiversity hotspots are geographic regions with an exceptionally high number of endemic species and where less than 30 per cent of the original habitat remains intact. There are 36 such regions globally. Together, they cover around 2.5 per cent of the Earth’s landmass. These biodiversity hotspots contain more than half of the total number of the world’s species. Conservation of the remaining intact areas in these regions will therefore play a vital role in reducing the risk of losing globally important biodiversity.

In 2024, the Council surveyed the GPFG-invested companies that have or are planning business activities in intact areas of nature in biodiversity hotspots. The survey was limited to sectors with a high risk of causing the loss of species, habitats or ecosystems. Examples include resource extraction and the operation of plantations. This survey will be an important basis for the Council’s further work with companies which have a high risk of adversely affecting biodiversity.

The threshold for exclusion is set intentionally high and any assessment of what constitutes serious environmental damage pursuant to the ethical guidelines must be made individually. At the same time, expectations regarding the way companies handle the risk of biodiversity loss have risen. The Council will continue to attach importance to the risk that important natural components may be lost. This includes both species and ecosystems. The Council will also attach importance to whether companies damage designated Natural Heritage Sites or other conservation areas, avoid harming biodiversity in other important, intact areas of nature, and focus on preventing biodiversity loss rather than merely mitigating the damage once it has been done.