Norway's sovereign wealth fund has divested billions from U.S. company Caterpillar and five Israeli banks, citing serious human rights violations linked to the Israel-Palestine conflict.

The move followed a review by Norway’s Council on Ethics, which advises the fund on whether companies should be excluded from its portfolio on ethical grounds.

The council found that Caterpillar’s bulldozers had been used by Israeli authorities to unlawfully demolish Palestinian property in Gaza and the West Bank, and said the company had failed to take measures to prevent such use. The fund held a 1.17 percent stake in Caterpillar, valued at about $2.1 billion.

It also concluded that five banks — Bank Hapoalim, Bank Leumi, Mizrahi Tefahot Bank, First International Bank of Israel, and FIBI Holdings — were financing construction in Israeli settlements deemed illegal under international law. The fund’s combined investments in these banks amounted to $661 million.

Norwegian Finance Minister Jens Stoltenberg defended the decision, saying the fund had struck a “right balance” by upholding ethical standards while ensuring investment policy was not dictated solely by political considerations.

The latest move forms part of a broader ethical review amid ongoing conflicts and the fund’s commitment to responsible investing. Earlier, the fund divested from 11 other Israeli companies, citing “extraordinary circumstances” and heightened scrutiny of investments tied to the conflict.

The Government Pension Fund Global, managed by Norway’s central bank, is the world’s largest sovereign wealth fund with assets worth about $2 trillion.