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-- Majority of companies reviewed meet ethical

guidelines

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-- Review carried out under tougher ethics standards

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-- One unnamed company could face exclusion

OSLO, March 10 - The watchdog of Norway's $1.8 trillion

sovereign wealth fund said on Monday that most companies it

reviewed over their activities in the occupied Palestinian

territories met the fund's ethical guidelines.

It said a second company could face divestment, however,

after the fund pulled out of Israeli telecoms firm Bezeq in

December under a new, tougher interpretation of its ethics

standards.

The fund, which owns 1.5% of listed shares across 9,000

companies globally, operates under guidelines set by Norway's

parliament and is seen as a leader in the environmental, social

and governance (ESG) field.

With the onset of the war in Gaza in October 2023, its

watchdog, the Council on Ethics, launched the review to check

for possible breaches by businesses aiding Israel's operations

in the occupied Palestinian territories.

"The Council has concluded that the majority of companies

reviewed do not meet the threshold for exclusion," it said in

its annual report, noting that the threshold to exclude is "high

by intention".

In addition to Bezeq, the council said it had so far sent a

second recommendation for exclusion to the board of the central

bank.

"They are companies involved with business operations within

critical infrastructure," it said.

It did not name the second company. The board often follows

the watchdog's recommendation, but not always.

Overall, the watchdog assessed around 65 companies in the

fund's portfolio working in sectors including energy supply,

infrastructure construction, travel and tourism and banking

among others.

Some companies had ceased operations in the West Bank, while

two companies had voiced their intention to do so, the council

said.

The fund focuses on the present and future risk of ethical

guideline breaches, rather than looking at past actions, it

said.

An additional "important factor in the Council's assessment

is whether the activities of a given company are a prerequisite

for the international law violation to occur," it said.

The watchdog said it contacted two weapons manufacturers -

one German and one from the U.S. - during the review.

"Neither company had any ongoing deliveries of relevant

weapon types to Israel," it said.

The council said that, having completed its review of

companies operating in Gaza, this year it would continue its

work looking into firms operating in the West Bank.