Construction equipment giant Caterpillar
has been dropped from a series of socially responsible investment indexes over concerns about the use of its bulldozers by the Israeli military in Palestine.
The US-based investment analysis firm MSCI has revealed that it has excluded Caterpillar from three of its MSCI ESG Indices, citing Israel’s use of the bulldozers to demolish Arab-owned properties in Palestine as a ‘key factor’ in the decision to downgrade the company. The decision was implemented in March following a regular index review in February, but has only just been disclosed.
As a result of the move, the giant TIAA-CREF pension fund for academics, which tracks the MSCI's indices in question, has already dropped $72million worth of Caterpillar stock from its Social Choice fund.
MSCI, which has more than 600 investment clients worldwide, said it had decided on the action because of ‘ongoing controversy associated with use of the company's equipment in the occupied Palestinian territories.’ However, other factors came into play, including concerns about employee safety and ‘management of environmental issues’.
Caterpillar has long been a target of boycott calls over the use of its bulldozers to demolish settlements in Palestine, but the company has always maintained that the equipment is built for peaceful use, and that it cannot be held responsible for how its customers operate its machinery.
However, activists point out that the company is quick to claim credit when its equipment is used for other purposes. Caterpillar’s latest sustainability report, for instance, notes that it is ‘fostering development’ by providing more than 700 pieces of heavy machinery, including 186 earthmoving products, for construction of the Belo Monte Dam in Brazil, the world's third-largest hydro-electric dam complex.
Caterpillar said it does not sell bulldozers directly to the Israeli military. Instead they are usually bought by the US government, which then resells them to Israel. The bulldozers are subsequently fitted out for military use, including with armour plating.
‘We hope and wish for a peaceful resolution to the unrest in the Middle East, but that solution is a political matter to be worked out by the appropriate parties,’ Caterpillar said. ‘We do not and should not have a role in that political process.’