The fund cited Caterpillar’s bulldozers being used in “widespread unlawful destruction” of Palestinian property, alongside the exclusion of five Israeli banks.
U.S. industrial equipment firm Caterpillar (CAT) stock slipped 0.5% in premarket trading on Tuesday after Norway’s sovereign wealth fund excluded the company from its holdings.
Norges Bank Investment Management, responsible for managing the $2 trillion fund, stated that Caterpillar’s exclusion, alongside five Israeli banks, was based on ethical grounds. The changes in holding were made in accordance with the fund’s ethics watchdog, called the Council on Ethics.
The six entities 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,” the fund said.
According to the latest available data, the fund held a 1.17% stake in Caterpillar valued at $2.1 billion as of June 30. Its stakes in the five Israeli banks stood at a combined $661 million.
Retail sentiment on Stocktwits about Caterpillar was in the ‘bearish’ territory at the time of writing.
The fund, a part of Norway’s central bank, had revealed on Aug. 18 that it would divest its holdings in six companies as part of an ongoing ethics review over the war in Gaza and developments in the West Bank. However, it did not reveal the names at the time.
The ethics watchdog alleged that the basis of the exclusion was that Israeli authorities are using bulldozers manufactured by Caterpillar in the “widespread unlawful destruction of Palestinian property.”
“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,” the Council of Ethics said in the recommendation issued on July 2, before adding that the company also has not implemented any measures to prevent such use.
Caterpillar stock has gained 18.3% this year, amid optimism around a recovery in industrial demand in North America later this year.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<