Norway's Sovereign Wealth Fund May Re-Invest in Defense Giants Amid US Pressure

Norway's sovereign wealth fund, the world's largest, is considering revising its investment policies to allow reinvestment in major Western defense companies. These companies, including Lockheed Martin, Boeing, Airbus, and BAE Systems, were previously excluded due to their involvement in nuclear weapons manufacturing. The potential shift follows recommendations from an independent ethics review committee, which cited pressure from the US administration regarding the fund's divestments from Israeli and American firms.

The fund, established in the 1990s to manage Norway's oil and gas revenues, oversees approximately $2.3 trillion in assets and holds about 1.5% of global publicly traded equities. Its current ethical guidelines prohibit investments in companies involved in nuclear weapons production, though it still holds shares in other defense contractors like Germany's Rheinmetall and Italy's Leonardo.

The committee, chaired by former central bank governor Svein Gjedrem, proposes easing the ban to permit investments in nuclear weapons manufacturers from countries party to the nuclear non-proliferation treaty, provided they are also Norwegian allies. It also suggests removing the requirement to assess whether companies' weapons are used in accordance with international humanitarian law.

This review was initiated in November 2025 after the fund's decisions to exit investments in Israeli and American companies caused controversy. In August of the previous year, the fund sold its holdings in four Israeli banks, Hapoalim, Leumi, Mizrahi Tefahot, and International, worth about 2 billion shekels, citing their alleged support for illegal settlements through financial services. It also divested from Caterpillar, stating its bulldozers were used to demolish Palestinian structures.

These divestments drew criticism from the Trump administration, which accused the fund of relying on unsubstantiated claims. The committee's report warned that ethical investment decisions could be perceived as Norwegian government policy, potentially leading to retaliatory measures, and noted the "retreat of the liberal international order."

The committee also recommended reducing the powers of the fund's ethics council, limiting its role to analyzing violations rather than recommending exclusions. Human rights organizations have criticized these recommendations, with Amnesty International warning of harm to human rights protections and the Norwegian Red Cross deeming investment in nuclear weapons manufacturers ethically and humanitarily unacceptable. The recommendations are not binding at this stage; the Norwegian government will conduct a public consultation, and the parliament is expected to vote on the changes by mid-2027.