Some European firms retreat from Israel-linked finance amid war pressure

LONDON, Nov 6 (Reuters): Several of Europe's biggest financial firms have cut back their links to Israeli companies or those with ties to the country, a Reuters analysis of filings shows, as pressure mounts from activists and governments to end the war in Gaza.
While banks and insurers are often vocal about their environmental and governance aims, they are less forthcoming about disclosing their potential exposure to war.
UniCredit put Israel on a "forbidden" list as the conflict escalated in October last year, said a source familiar with the matter, confirming a study, opens new tab by Dutch NGO PAX.
While in line with the Italian bank's defence-sector policy of not directly financing arms exports to any country involved in conflict, it goes beyond Italy's guidelines on arms exports to Israel.
UniCredit declined to comment on its move and the Israeli finance ministry also declined to comment.
Meanwhile, Norwegian asset manager Storebrand and French insurer AXA have sold shares of some Israeli firms, including banks.
Although corporate filings offer only a glimpse into such exposures, they show companies have been readjusting.
"We don't know whether this represents the beginning of a shift in the industry, one that recognises the power banks have in choosing where to allocate capital, and where not," said Martin Rohner, executive director at the Global Alliance for Banking on Values, which focuses on sustainable financing.
"Investing in the production and trade of weapons is fundamentally opposed to the principles of sustainable development," Rohner added.
Israeli Finance Minister Bezalel Smotrich told a press briefing last week that although there are challenges to Israel's economy, firms are still raising money. "I sit with foreign investors and they believe in our economy," he said.
Reuters has reported that Israel's investor base has narrowed since it entered Gaza last year in response to attacks by Hamas, and it is feeling the effects of rising borrowing costs.
The potential wider effects can be seen in the approach taken by Storebrand, which a filing showed divested a holding worth about $24 million in Palantir (PLTR.N), opens new tab, citing the risk of violations of international humanitarian law and human rights.
US group Palantir, which provides technology to Israel's military, did not respond to a request for comment.
Storebrand's annual investment review, opens new tab said that, as of the end of 2023, it had excluded 24 firms, including Israeli companies, across its portfolios in relation to the occupation of Palestinian territories.
The International Court of Justice, the United Nations' highest court, ruled in January of plausible risk of irreparable harm to Palestinian rights to be protected from genocide.
The same court said in July that Israel's occupation of Palestinian territories including the settlements is illegal.
Israel has rejected the rulings, which combined with growing pressure from activists and governments, are nevertheless having an impact on investment decisions.
AXA, one of Europe's largest insurers, British bank Barclays and German insurer Allianz have increasingly been targeted by campaigners.