While banks and insurers are often vocal about their environmental and governance aims, they are less forthcoming about disclosing their potential exposure to war, Reuters reported.
UniCredit put Israel on a "forbidden" list as the conflict escalated in October last year, said a source familiar with the matter, confirming a study by the Dutch non-governmental organization (NGO) PAX.
While in line with the Italian bank's defense-sector policy of not directly financing arms exports to any state involved in the conflict, it goes beyond Italy's guidelines on arms exports to Israel.
UniCredit declined to comment on its move and the Israeli finance ministry declined to comment, according to Reuters.
Meanwhile, Norwegian asset manager Storebrand and French insurer AXA have sold shares of some Israeli firms, including banks.
Although corporate filings offer only a glimpse into such exposures, they show companies have been readjusting.
Israeli Finance Minister Bezalel Smotrich told a press briefing last week that although there are challenges to Israel's economy, firms are still raising money. "I sit with foreign investors and they believe in our economy," he said.
Reuters has reported that Israel's investor base has narrowed since it began a large-scale military campaign in Gaza last year after Hamas' attack and it is feeling the effects of rising borrowing costs.
The potential wider effects can be seen in the approach Storebrand took, which a filing showed divested a holding worth about $24 million in Palantir, citing the risk of violations of international humanitarian law and human rights.
US group Palantir, which provides technology to Israel's military, did not respond to a request for comment.
Storebrand's annual investment review said that, as of the end of 2023, it had excluded 24 firms, including Israeli companies, across its portfolios about the occupation of Palestinian territories.
The International Court of Justice, the United Nations' highest court, ruled in January of plausible risk of irreparable harm to Palestinian rights to be protected from genocide.
The same court said in July that Israel's occupation of Palestinian territories, including the settlements, is illegal.
MNA