Thursday, September 25, 2025
Norges Bank Investment Management (NBIM), which manages Norway’s $2 trillion sovereign wealth fund, announced last month that it was divesting from its investment in U.S. construction equipment manufacturer, Caterpillar, Inc. NBIM reportedly had a roughly 1.2 percent ownership (worth about $2.4 billion) of the company at the end of 2024. In addition to Caterpillar, the fund divested from its investments in five Israeli banks.
In explaining its decision, which it said was based on recommendations from its ethics council, NBIM said that Caterpillar bulldozers were “being used by Israeli authorities in the widespread unlawful destruction of Palestinian property.” The five banks, NBIM noted, “had provided financial services necessary for the construction of Israeli settlements in the West Bank.” The fund manager added that there was an “unacceptable risk that the companies contribute to serious violations of the rights of individuals in situations of war and conflict.”
Full disclosure: I was previously employed by Caterpillar and I still own the company’s stock in my portfolio. That was one of the reasons NBIM’s investment exit caught my attention. But more importantly, the decision raised a couple of broader questions for me.
Caterpillar’s iconic yellow machines are ubiquitous. For about a century, they have been used around the world at road construction and building sites, and in mining, marine, power generation, railway, and a host of other industries. Some of the company’s equipment are designed for use not only in building, but also in demolishing structures. The question for me is this: Should a private corporation like Caterpillar that sells products for such everyday uses be responsible for policing how its customers utilize them?
Kitchen knives came to mind as I was thinking about the issue. They are in homes everywhere around the world, and it would be quite difficult for any of us to live without them. Like buyers of Caterpillar’s yellow machines, the overwhelming majority of people who own culinary instruments use them for their intended purposes. But occasionally, knives are employed by some people to either cause bodily harm or engage in other nefarious activities. Could someone at some point call for a halt of investment in a kitchen knife manufacturer because it failed to stop improper use of its products by some of its customers?
Boycott and divestment campaigns have been a constant presence in democratic societies for ages. Various interest groups use them to highlight thorny socio-political issues that might not otherwise receive the attention they deserve. As it is with anything having to do with politics, the debates surrounding these campaigns are often quite contentious. Earlier this month, the White House expressed its strong displeasure at the NBIM decision to divest from Caterpillar, saying that it was “very troubled” by it.
In every country, law enforcement agencies exist to deal with cases of people who intentionally use instruments like kitchen knives to cause injury to others. The widespread demolition of property and the illegal expansion of settlements in Palestine constitute a political problem of global proportions. The international community has established channels through which these types of global problems are supposed to be addressed. The United Nations and its malfunctioning body part, the Security Council, are the entities that NBIM should be looking to for solutions on this subject. It would be one thing if NBIM took a broad-based action against all companies doing business with Israel. But singling out one foreign company in such a specific way is a slippery slope. We surely wouldn’t shift responsibility from the police anywhere, no matter how dysfunctional they are, to a kitchen knife manufacturer and ask them to step outside their corporate role to go after customers who are improperly using their products.
There is also quite a good bit of irony in the decision by NBIM to divest from its investment in Caterpillar. In the last couple of decades, environmental activists have constantly and vociferously called for investment fund managers to sell their stakes in all fossil fuel companies and to stop providing any more capital to the coal, oil and gas industries. The massive pile of assets under NBIM’s management have been accumulated using Norway’s oil and gas revenues. There are no indications that the country will stop tapping its “despised” natural resources anytime soon. I wonder whether the irony crossed the minds of any of the NBIM’s members as they were debating the decision to sell their Caterpillar stock.