Norway’s $2-trillion sovereign wealth fund, the largest in the world, has cut ties with US construction giant Caterpillar and five Israeli banks over their alleged role in rights violations linked to Israel’s actions in Gaza and the occupied West Bank.

The Norwegian central bank said Monday that Caterpillar was excluded from the fund “due to an unacceptable risk that the companies contribute to serious violations of the rights of individuals in situations of war and conflict.”

The fund’s ethics council pointed directly to Caterpillar bulldozers being used by Israeli authorities in the “widespread unlawful destruction of Palestinian property.”

“There is no doubt that Caterpillar’s products are being used to commit extensive and systematic violations of international humanitarian law,” the council said, adding that the company had “not implemented any measures to prevent such use.”

Prior to divestment, the fund held a 1.17 percent stake in Caterpillar worth $2.1bn as of June 30.

The fund also sold off its combined $661m stakes in five Israeli banks: Hapoalim, Bank Leumi, Mizrahi Tefahot Bank, First International Bank of Israel, and FIBI Holdings.

According to the ethics council, these banks “by providing financial services that are a necessary prerequisite for construction activity in Israeli settlements in the West Bank, including East Jerusalem … contributed to the maintenance of Israeli settlements.”

“The settlements have been established in violation of international law, and their continued existence constitutes an ongoing breach of international law,” the council said.

The decision comes just a week after 21 countries condemned Israel’s plan to build a massive new settlement in the E1 area east of Jerusalem, warning it would make a two-state solution impossible.

Last year, the International Court of Justice (ICJ) ruled that settlements on Palestinian land seized in 1967 should be ended “as rapidly as possible,” saying they are “being maintained in violation of international law.”

Israel’s far-right finance minister Bezalel Smotrich openly praised the settlement drive, saying it would “bury the idea of a Palestinian state, because there is nothing to recognise and no one to recognise.”

The wealth fund, which holds stakes in more than 8,400 companies worldwide, had already said on August 18 it would divest from six firms tied to the Gaza war and settlement expansion, but waited until sales were completed before naming them.