Norway's largest pension fund announced its withdrawal from investing in well-known US stock company Caterpillar!
According to a Chinese journalist from a securities firm, on June 26th local time, Norway's largest pension fund, KLP, announced the sale of Caterpillar stocks and bonds worth 728 million Swedish kroner (approximately 69 million US dollars) due to concerns that the US company may have contributed to Israel's human rights violations 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. The company's revenue exceeded $67 billion last year, and its latest market value exceeded $160 billion, equivalent to approximately RMB 1.16 trillion. Since 2016, Caterpillar's stock has risen more than five times in the US stock market.
KLP is Norway's largest pension fund, with total assets exceeding 900 billion Norwegian kroner, equivalent to approximately 615.5 billion RMB.
KLP sells its holdings in Caterpillar
On June 26th, Norway's largest pension fund, KLP, announced on its official website that it has excluded Caterpillar, a US company, on concerns that it may have contributed to Israel's human rights violations in the West Bank and Gaza Strip.
Kiran Aziz, the responsible investment manager of KLP, stated that the fund sold Caterpillar stocks and bonds worth 728 million Swedish kroner (approximately 69 million US dollars) earlier this month. Kiran Aziz pointed out that the equipment of this Texas based company was used to "demolish Palestinian houses and infrastructure, clear roads for Israeli settlements.". In addition, some have accused Caterpillar of using the equipment they delivered for the Gaza War.
Kiran Aziz said, "Although Caterpillar has expressed 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 international law in situations of war or conflict. The company cannot guarantee us what it has done in this regard."
KLP stated that the company is a responsible investor willing to withdraw from the company for environmental, social, and governance reasons. According to Bloomberg, in recent years, due to climate risks, KLP has targeted Saudi Aramco, American companies monitoring refugee centers related to human rights violations, and other companies related to Israeli settlements in the West Bank.
The latest decision by KLP has also sparked a broader movement among human rights activists, urging the financial industry to divest and consumers to boycott companies associated with Israel.
United Nations experts call for an end to arms transfers to Israel
The Office of the United Nations High Commissioner for Human Rights stated in a statement released last week that Caterpillar is one of many companies providing military equipment to Israel. The institution urges investors holding shares in the company to take action.
According to the United Nations News Center, 32 United Nations human rights experts stated in a joint statement released on June 20th that the transfer of weapons and ammunition to Israel may constitute a serious violation of human rights law and international humanitarian law, and may become accomplices to international crimes, including genocide. They demand an immediate cessation of this transfer.
In a joint statement, human rights experts stated that in accordance with the recent calls from the Human Rights Council and independent experts of the United Nations to stop the sale, transfer, and transfer of weapons, ammunition, and other military equipment to Israel, manufacturers supplying weapons to Israel should also stop transferring them, even if they are under existing export licenses. The companies named include Caterpillar, British Aerospace Systems, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, Oshkosh, Rheinmetals, Rolls Royce Power Systems, Raytheon Technologies, and ThyssenKrupp.
Financial institutions investing in these arms companies are also required to take responsibility. The statement urges these institutional investors to take action. The named financial institutions include Bank of America, BlackRock, Capital Group, JPMorgan Chase, Morgan Stanley, Norwegian Bank Investment Management, Vanguard Group, Wellington Management, and Wells Fargo.
Experts say 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 related to human rights violations to promoting human rights violations, thereby becoming potential accomplices of atrocities.
What is the origin of Caterpillar?
Caterpillar is a global leading manufacturing enterprise in the fields of construction machinery, mining equipment, non road diesel and natural gas engines, industrial gas turbines, and electric drive internal combustion locomotives. In August 2023, Caterpillar was selected for the Fortune Global 500 list and ranked 230th.
According to the financial report, Caterpillar's total revenue for the year 2023 was $67.06 billion, an increase of 12.84% from $59.4 billion in 2022, reflecting price increases and sales growth.
In 2023, Caterpillar's adjusted operating profit margin was 20.5%, while in 2022, the adjusted operating profit margin was 15.4%. The adjusted earnings per share in 2023 were $21.21, while the adjusted earnings per share in 2022 were $13.84. In 2023, Caterpillar's net cash flow from operating activities was $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.
Regarding the above annual report performance, Caterpillar Chairman and CEO An Bojun said, "I am deeply proud of the strong performance of Caterpillar's global team. We achieved the best annual performance in the company's 98 year history, including record breaking annual sales and revenue, adjusted earnings per share, and cash flow in the mechanical, energy, and transportation businesses. We will continue to be committed to serving our customers, executing corporate strategies, 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, which is basically the same as the first quarter of 2023, as most of the impact of the decline in sales was offset by price increases. The adjusted operating profit margin for the first quarter of 2024 was 22.2%, while for the first quarter of 2023 it was 21.1%. The adjusted earnings per share in the first quarter of 2024 were $5.60, compared to $4.91 in the first quarter of 2023. As of March 31, 2024, the company's operating cash flow was $2.1 billion, and the company had $5 billion in cash at the end of the first quarter. In the first quarter, Caterpillar invested $4.5 billion in cash to repurchase its common stock and $600 million in cash for dividends.
Regarding the first quarter performance, Chairman and CEO of Caterpillar, An Bojun, stated that this quarter brought higher adjusted operating profit margins, record breaking 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 invest a record $5.1 billion in cash for stock repurchases and dividends in the first quarter.