European Financial Firms Reduce Investments in Israel Due to Gaza War Pressures
A Reuters analysis has revealed that several major financial companies in Europe have reduced their investments in companies linked to Israel, or those with direct or indirect ties to the country, due to growing pressure from activists and governments to end the war in Gaza.
This shift comes at a time when many banks and insurance companies are committed to sustainability goals, despite unclear details regarding their exposure to armed conflicts.
Among the institutions taking clear steps in this direction is the Italian bank UniCredit, which added Israel to its “restricted countries” list after the escalation of Israeli aggression in October 2023, according to the Dutch NGO Pax. This decision extends the bank’s policy of refraining from financing direct arms exports to countries involved in conflicts, surpassing Italy’s guidelines for arms exports to Israel. Both UniCredit and Israel’s Ministry of Finance declined to comment on the matter.
Similarly, Norwegian asset management firm Storebrand and French insurance company AXA have reduced some of their investments in Israeli companies, including certain banks.
Financial Corporate Policies
Documents show that companies are adjusting their investment policies toward Israel. Martin Rohner, Executive Director of the Global Alliance for Banking on Values, stated that there is a noticeable shift in financial institutions’ policies regarding investment allocations that align with sustainable development principles. He added that investing in the arms industry fundamentally contradicts these principles.
Storebrand previously announced in its annual investment report that it excluded 24 companies from its portfolio at the end of 2023, including Israeli companies, due to their involvement in Israeli settlements. The Norwegian firm also withdrew about $24 million from its investment in the U.S. company Palantir, which supplies the Israeli army with technologies linked to human rights concerns.
The Irish Strategic Investment Fund announced the sale of stakes in six Israeli companies, including some major Israeli banks, citing the risks these investments posed in relation to its investment standards.
Earlier this year, the Irish fund, valued at €15 billion, stated that the risks associated with these investments no longer met its investment criteria.
The Norwegian Sovereign Wealth Fund, the largest in the world, valued at $1.8 trillion, may also withdraw investments from companies supporting Israeli operations in the occupied Palestinian territories, which violate corporate ethics standards.
Increasing Scrutiny of Investments in Israeli Banks
Investments in Israeli banks are also facing increasing scrutiny. In 2020, the United Nations included them on its list of companies linked to settlements in Palestinian territories as part of a review of their impacts on Palestinian rights.
According to a study by the research firm Profundo, commissioned by the “Eco” corporate monitoring body, the French insurance company AXA sold most of its shares in Israeli banks this year, retaining only a small stake in Bank Leumi.
Although Bank Leumi did not respond to a request for comment, a spokesperson for AXA confirmed that the company no longer invests in the targeted banks, and that the UN list is one of the criteria considered when making investment decisions.
Richard Portes, Professor of Economics at the London Business School, pointed out that burdening private companies with determining investment policies in the context of international conflicts can be controversial, emphasizing the need for governments to provide clear policies.
Other companies, such as Barclays Bank, have faced significant pressure from campaigns in the UK, prompting the bank to withdraw from sponsoring certain events. According to a report by the Financial Times, the bank is now considering halting the sale of Israeli government bonds, as it dropped out of the top five dealers in Israeli bonds during the second and third quarters of this year.
Decline in Foreign Direct Investment in Israel
Foreign direct investment (FDI) in Israel has sharply declined, with data from the United Nations Conference on Trade and Development (UNCTAD) showing a 29% decrease in 2023, marking the lowest level since 2016. These changes are attributed to increasing pressure from activists and the international community, adding complexity to companies’ investment decisions regarding the Israeli market.
