Sovereign Wealth Fund Blacklists Fossil Fuels

By Shmuel Smith

The Israeli Leviathan gas field gas processing rig off coast of Caesarea. (Marc Israel Sellem/POOL)

YERUSHALAYIM – One of the first decisions of Israel’s newly operational sovereign wealth fund has been to rule out investment in the oil and gas industry, which is the fund’s prime benefactor, The Times of Israel reported on Tuesday.

The board of the Israeli Citizens’ Fund, as it is called, has decided to “avoid direct investment” in companies involved in the extraction and production of oil or gas, Yarom Ariav told the Knesset committee that oversees the fund.

Ariav explained the blacklisting of fossil fuel as a mixture of ethics and economics, according to ToI, though there was no official statement on the matter.

The fund was established following the discovery of large reservoirs of natural gas off Israel’s Mediterranean coastline, to invest the expected energy profits as well as proceeds from the extraction of other natural resources, such as minerals and stone.

After years of waiting for the promised windfall, the fund, which was mandated by law in 2014, began operations on June 1 after passing the required income threshold of NIS 1 billion, a process that took longer than expected.

The committee was told that NIS 1.14 million had entered the fund and had already been converted into just under $342 million. No further proceeds are expected until May.

According to the rules, only 3.5 percent of investment income may be spent on social, economic, and educational projects for the first nine years.

The rest of the fund’s capital is restricted to overseas investment, in foreign currency, to protect the stability of the shekel.

Ariav, an economist, a former Finance Ministry director-general, and former President and CEO of ICL Fertilizers Europe, will report on the fund’s activities to the Knesset every three months.

In this, his first report, he told the MKs that the fund’s steering panel will be responsible stewards of the national resource, seeking 40-year investments to limit risk and fulfill the law’s aim of benefiting future generations.

As part of its cautious approach, money already in the fund will be invested slowly, with weekly investments over four months, Ariav noted.

A seven-member council will run the fund. It will include representatives of the Prime Minister’s Office, the Finance Ministry, and the Bank of Israel, as well as economists and other policy experts.

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