Norway's sovereign wealth fund has called for an easing of the nuclear weapons ban after the Gaza investment dispute

In this review, Norway's sovereign wealth fund was asked to remove moral hazard restrictions on its investments.

A government-appointed committee has called on Norway's sovereign wealth fund to lift investment restrictions based on moral risks, including those related to nuclear weapons and Israel's genocidal war on Gaza.

In a report released Thursday, the committee said the world's largest sovereign wealth fund, which controls nearly $2.3 trillion in assets, should be allowed to invest in companies that make nuclear weapons. Referring to Gaza, he also asked the fund to refrain from interfering in diplomatic issues.

List 3 Items List 1 of 3 Israel Detains More Than 2,000 Palestinian Children Since 2023: Report

List 2 of 3 EU countries to step up game as Arctic becomes strategic geopolitical frontier

List 3 of 3 Finland shelters under French nuclear umbrella amid Russian and US uncertainty

End of list Led by former central bank governor Sven Godram, the committee recommended easing the fund's investment conditions as part of a wider overhaul that would give its manager, the central bank, more discretion over how to handle moral hazard.

The review was prompted in part by controversy over the fund's failure to invest last year by US construction giant Caterpillar. The fund said the move was due to Caterpillar's alleged involvement in rights violations committed by Israel amid its genocidal war in Gaza and the occupied West Bank. Washington has since pressed Oslo for the move.

"Parts of the rationale for the committee at the behest of the government said that the appointment of the fund management committee was related to the war in Gaza." In the report, the committee argued that decisions about the "behavior of other governments" should not be taken by the fund, but "reserved for the normal diplomatic channels of the Norwegian authorities".

The unanimous recommendations of the committee in this report, which was submitted to the Ministry of Finance, also called for a review of the exclusion of this fund from investing in companies active in the production of nuclear weapons.

Citing Norway's reliance on NATO's nuclear deterrent and a deteriorating security environment, the report suggests that investment in companies based in the US, UK and France involved in the production of nuclear weapons should be allowed.

The proposals also extend to reshaping the fund's independent ethics watchdog role and allowing some evaluations of potential investments to remain confidential.

The report has already sparked a backlash in Norway, with opposition politicians criticizing the possible changes. Meanwhile, analysts suggested that weakening moral considerations could have a far-reaching effect.

"If Norway's sovereign wealth fund – often seen as a global gold standard – changes its stance on nuclear weapons, it will open Pandora's box for many global investors to follow suit," Lawrence Loh, director of the Center for Governance and Sustainability at the National University of Singapore Business School, told Al Jazeera.

The committee described the proposed change as a commitment to protect Norway's national security, citing the country's dependence on its allies' nuclear umbrella.

"The global security situation has changed. Norway is strengthening its defense capabilities, and the protection provided by NATO's nuclear umbrella has become increasingly important. Companies that are rejoining will produce the weapons that Norway needs to defend itself," the report said.

Gareth Evans, Australia's former foreign minister, told Al Jazeera that the report was "an encouraging initiative in a world alarmingly complacent about the dangers of nuclear war, all major nuclear arms control agreements dead, dying or in vital support, and the long-standing taboo against threats or erosion being used."

Amid US President Donald Trump's reshuffle of NATO, European countries are increasingly looking to join France's nuclear deterrent umbrella.

Trump said on Thursday that Washington was in talks with Russia and China aimed at denuclearizing the countries with the largest stockpiles of nuclear weapons.

However, Löh warned that changing the Norwegian fund's investment terms could encourage others to invest in nuclear companies "in scenarios different from Norway's that the invested companies are in NATO allies with nuclear weapons deployed."