Norway's largest pension fund announced that it has withdrawn its investment in Caterpillar, a well-known U.S. stock!
On June 26, local time, KLP, Norway's largest pension fund, announced that it had sold 728 million Swedish kronor (about $69 million) worth of Caterpillar stocks and bonds, due to concerns that the American company may have contributed to Israel's human rights abuses in the West Bank and Gaza.
According to public information, Caterpillar is one of the world's largest manufacturers of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines, with revenue of more than $67 billion last year and a market value of more than $160 billion, equivalent to about 1.16 trillion yuan. Since 2016, Caterpillar's stock has risen more than fivefold in the U.S. stock market.
KLP is Norway's largest pension fund, with total assets of more than 900 billion Norwegian kroner, equivalent to about 615.5 billion yuan.
KLP sells its stake in Caterpillar
On June 26, KLP, Norway's largest pension fund, announced on its official website that the KLP fund had excluded Caterpillar, an American company, citing concerns that the company could contribute to Israel's human rights abuses in the West Bank and Gaza.
KLP's head of responsible investment, Kiran Aziz, said the fund sold 728 million Swedish kronor ($69 million) worth of Caterpillar stocks and bonds earlier this month. Kiran Aziz noted that the equipment of the Texas-based company was used to "demolish Palestinian homes and infrastructure and clear the way for Israeli settlements." In addition, there are accusations against Caterpillar, saying that the equipment they delivered was used in the Gaza war.
"Despite Caterpillar's stated willingness to engage in dialogue with KLP, the company's response has not convincingly demonstrated its ability to effectively reduce the risk of violating individual rights or violating international law in the event of war or conflict," said Kiran Aziz. The company can't assure us what it's doing in this regard. ”
KLP said the company is a responsible investor and is willing to divest from the company for environmental, social and governance reasons. According to Bloomberg, in recent years, the KLP has targeted Saudi Aramco, U.S. companies that oversee refugee centers linked to human rights abuses, and other companies linked to Israeli settlements in the West Bank because of climate risks.
The KLP's latest decision has also sparked a broader movement of human rights activists urging the financial sector to withdraw and consumers to boycott companies with ties to Israel.
UN experts call for an end to arms transfers to Israel
In a statement released last week, the Office of the United Nations High Commissioner for Human Rights noted that Caterpillar is one of many companies that supply military equipment to Israel. The agency urged investors who hold shares in the company to "take action."
In a joint statement issued on 20 June, 32 UN human rights experts said that the transfer of weapons and ammunition to Israel could constitute serious violations of human rights law and international humanitarian law, and could be complicit in international crimes, including genocide, according to the UN News Centre. They demanded that such transfers be halted immediately.
In a joint statement, the human rights experts said that manufacturers of weapons supplying Israel should also stop transfers, even if they are under existing export licences, in line with the recent call by the Human Rights Council and the UN independent expert to States to stop selling, transferring and transferring weapons, ammunition and other military equipment to Israel. Among the companies named are: Caterpillar Inc., British Aerospace Systems, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, Oshkosh, Rheinmetall, Rolls-Royce Power Systems, Raytheon Technologies and ThyssenKrupp.
Financial institutions that invest in these arms companies are also held accountable. The statement urged these institutional investors to take action. The financial institutions named include Bank of America, BlackRock & Co., Capital Group Inc., JPMorgan Chase & Co., Morgan Stanley, Norges Bank Investment Management, Vanguard Group, Wellington Management Co. and Wells Fargo Inc.
The experts said that if these financial institutions fail to stop or ease their business relationships with these arms manufacturers who transfer weapons to Israel, they may shift from being directly linked to human rights violations to facilitating human rights violations, thus contributing to potential complicity in atrocities.
Where did Caterpillar come from?
Caterpillar Inc. is a global leader in the manufacture of construction machinery, mining equipment, off-highway diesel and natural gas engines, industrial gas turbines and electrically driven diesel locomotives. In August 2023, Caterpillar was named to the 2023 Fortune Global 500 list, ranking 230th.
According to the financial report, Caterpillar's total revenue for the full year of 2023 was $67.06 billion, an increase of 12.84% from $59.4 billion in 2022, which reflected price increases and sales volume growth.
In 2023, Caterpillar's adjusted operating margin was 20.5%, compared to 15.4% in 2022. Adjusted earnings per share for 2023 were $21.21, compared to adjusted earnings per share of $13.84 in 2022. For the full year 2023, Caterpillar had net cash flow from operating activities of $12.9 billion. During 2023, the Company repurchased $5 billion of Caterpillar common stock and paid $2.6 billion in dividends. At the end of 2023, the company had $7 billion in cash.
Commenting on the results, Mr. Ann, Chairman and Chief Executive Officer of Caterpillar Inc., said, "I am proud of the strong performance of the Caterpillar global team. We delivered our best annual results in our 98-year history, including record full-year sales and revenues, adjusted earnings per share, and cash flow from our machinery, energy and transportation businesses. We remain committed to serving our customers, executing our corporate strategy, and investing in long-term profitable growth. ”
In addition, the latest data shows that Caterpillar's revenue in the first quarter of 2024 was $15.8 billion, essentially unchanged from the first quarter of 2023, as much of the impact of lower volumes was offset by higher prices. Adjusted operating margin was 22.2% in the first quarter of 2024, compared to 21.1% in the first quarter of 2023. Adjusted earnings per share for the first quarter of 2024 were $5.60, compared to $4.91 for the first quarter of 2023. For the three months ended March 31, 2024, the company had cash flow from operating activities of $2.1 billion, with the Company having $5.0 billion in cash at the end of the first quarter. During the first quarter, Caterpillar invested $4.5 billion in cash to repurchase Caterpillar common stock and $600 million in dividends.
Commenting on the first quarter's results, Teerpillar Chairman and Chief Executive Officer An Bojun said: "The quarter delivered higher adjusted operating margins, record adjusted earnings per share and strong free cash flow in the machinery, energy and transportation businesses. Thanks to a strong balance sheet and free cash flow from the machinery, energy and transportation businesses, the company was able to commit a record $5.1 billion in cash for share repurchases and dividends in the first quarter.
Editor-in-charge: Tactical Heng
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