Norway’s US$1.7 trillion sovereign wealth fund has decided to exclude Adani Ports & Special Economic Zone Ltd from its portfolio, citing ‘unacceptable’ risks that the company is tied to human rights violations in war and conflict zones.

Norges Bank Investment Management (NBIM), which manages the fund, announced the decision in a statement. The investor is also excluding US-based L3Harris Technolgies Inc, which develops components for nuclear weapons, and China’s Weichai Power Co, based on concerns it’s contributing to the sale of military equipment to Russia and Belarus.

The decision follows recommendations late last year from Norway’s Council on Ethics, which advises the Oslo-based fund.

NBIM has had Gautam Adani’s logistics and transportation firm ‘under observation’ since 2022, originally due to its involvement in a port terminal in Myanmar. The company sold that port project last year. In a separate statement, Norway’s Council on Ethics noted that “no information on the buyer is available”, making it impossible to ascertain whether Adani still has ties to the division.

“In a situation in which extremely serious norm violations are taking place, this constitutes an unacceptable risk,” the Council on Ethics said.

NBIM responded to a request for comment by referring to the recommendations from the Council on Ethics. The three companies affected by the exclusions didn’t immediately respond to requests for comment.

Aerospace and defence firms, as well as suppliers, have traditionally been widely shunned by environmental, social and governance (ESG) investors. Russia’s invasion of Ukraine — and the huge gains in the stocks that followed — have more recently led some portfolio managers to reconsider the sector. As of late last year, more than 1,000 ESG funds held stocks in the sector, a roughly 25% increase since Russia’s invasion. To be sure, most ESG fund managers continue to avoid such stocks.