Image 01 Image 03

19 Attorneys General Slam Morningstar’s Surreptitious Effort to Impose ESG and Anti-Israel Investment Bias

19 Attorneys General Slam Morningstar’s Surreptitious Effort to Impose ESG and Anti-Israel Investment Bias

“Following public reports into Morningstar’s alleged anti-Israel bias and concerns raised to my Office, we launched an investigation into Morningstar Inc. and Sustainalytics over potential consumer fraud issues. 18 attorneys general have now joined our investigation. These ESG investing firms are playing politics with pensions and real people’s livelihoods,” said Attorney General Schmitt.

Led by Missouri, nineteen states are investigating whether Morningstar, Inc., investment management firm’s Environmental, Social, and Governance (ESG) evaluations violate consumer-protection law and unfair trade practices.

ESG is an investment strategy that tries to reward companies who publicly adhere to politically-correct values of environmentalism, woke social justice issues like diversity, equity, and inclusion (DEI), and racial diversity in its leadership; and to pressure companies that don’t adhere to them into doing so.

Morningstar has been accused of anti-Israel bias. The investment management company attributed this to complaints following its April 2020 acquisition of the ESG ratings and research firm Sustainalytics. The Dutch company is one of the main firms rating companies based on their social responsibility, and Morningstar wanted a bigger presence in the fast-growing ESG market.

After initially blowing off the criticism, Morningstar began a review two weeks before the Illinois Investment Policy Board was set to blacklist the company, which would have barred state-run pension systems from investing in Morningstar.

Morningstar eventually offered a grudging, partial acknowledgment of bias at Sustainalytics. According to Morningstar’s June 2, 2022, public letter:

[I]n retrospect, our initial review was overly dismissive of the serious bias concerns raised by the organization JLens, the Illinois Investment Policy Board (IIPB), and other entities…

Based on these findings, White & Case made various recommendations in the report, which we have decided to adopt in full. Morningstar has discontinued the Human Rights Radar, and additional steps we are taking include but are not limited to: (1) embracing greater transparency as to Sustainalytics’ research sources and ratings methodology, (2) monitoring our internal processes to ensure greater consistency and adherence to our methodology, (3) adopting a style guide to ensure all research products are free from biased terminology, and (4) discontinuing further bespoke research on behalf of clients.

Nevertheless, Morningstar insisted there was “no evidence of pervasive or systemic bias against Israel across Sustainalytics products, including the Sustainalytics ESG Risk Rating.”

Not everyone is taking Morningstar’s word for it.

In mid-June, Richard Goldberg at Foundation for Defense of Democracies published a report explaining “just how pervasive and systemic that bias remains,” as his introductory summary put it.

Mansueto and Kapoor have touted these findings, including in a June 2 public statement, as evidence supporting Morningstar’s prior assertions that “[n]either Morningstar nor Sustainalytics supports the anti-Israel BDS campaign.”

Yet, notwithstanding the conclusions set forth at the beginning of the Report, the evidence collected and presented in the Report tells a different story. On a full reading of the Report, rather than exonerating Morningstar, the White & Case investigation instead demonstrates conclusively that Sustainalytics’ processes and products — including its flagship ESG Risk Ratings product — are infected by systemic bias against Israel. Specifically, the Report conclusively demonstrates that:

  1. Sustainalytics relies heavily, if not quite exclusively, on deeply flawed, anti-Israel sources, including anti-Israel non-governmental organizations (NGOs) such as Who Profits, Human Rights Watch, and Amnesty International.
  2. Companies that are in any way involved in the Israeli economy are automatically identified as complicit in human rights abuses in all Sustainalytics’ core products and are thus disproportionately punished in Sustainalytics ratings compared to companies doing business in any other country.

In response to the Report, Morningstar announced that it would implement minor remedial measures to enhance the transparency and reliability of its ESG products. While a modest start, these measures are not sufficient to address the underlying and pervasive anti-Israel biases revealed in the Report. In addition to the minor remedial steps Morningstar announced it would take to address concerns of bias within Sustainalytics, Morningstar must:

  1. Prohibit reliance on biased and radical anti-Israel sources;
  2. Remove Israel from the list of conflict zones that automatically trigger a response by Sustainalytics’ Incidents team; and
  3. Address, across all its core products, the root causes of Sustainalytics’ problematic downgrading, based on alleged but unfounded complicity in human rights violations, of companies that do business in Israel.

In mid-July, a group of Jewish organizations sent Morningstar a letter asking the organization to take additional steps to root out its anti-Israel bias.

Most importantly, last month Missouri’s Attorney General Eric Schmitt launched an investigation into Morningstar, which other states have now joined. Schmitt explained:

Following public reports into Morningstar’s alleged anti-Israel bias and concerns raised to my Office, we launched an investigation into Morningstar Inc. and Sustainalytics over potential consumer fraud issues. 18 attorneys general have now joined our investigation. These ESG investing firms are playing politics with pensions and real people’s livelihoods.

Missouri passed an anti-BDS law in July 2020, but it only prevents the government from contracting with BDS supporters. As noted in Schmitt’s statement quoted above, the current investigation officially targets potential consumer fraud or unfair trade practices. The AG is looking into whether Morningstar and Sustainalytics were secretly boycotting or enabling a boycott against Israel, and whether that violated laws regulating business practices.

Schmitt sent civil investigative demands to Morningstar and Sustainalytics. The demands include 43 interrogatories (a fancy legal name for questions) and/or document requests – most are both. Among them are (*snooze alert* – they’re written in Legalese):

  • Identify and provide all documents and communications relating to the March 16, 2021 statement, “Morningstar Affirms Integrity of ESG Research and Ratings,” including all documents referenced in the statement and documents relating to your internal review.
  • Identify and provide all documents and communications with the Illinois Investment Policy Board relating to ESG Services or BDS.
  • Identify and provide all Documents and Communications relating to changes to your ESG services relating to: (1) the May 11, 2022 report from White & Case, “Report of Independent Investigative Counsel Regarding Alleged Anti-Israel Bias in Morningstar, Inc. ESG Products and Services” (“White & Case Report”); (2) Your June 2, 2022 statement, “A Letter from Joe Mansueto and Kunal Kapoor”; and/or (3) the June 22, 2022 meeting of the Illinois Investment Policy Board Committee on Israel Boycott Restrictions.
  • Identify and provide all documents and communications with any federal government or state government entity relating to ESG Services and BDS.
  • Identify and provide all documents and communications with any third-party relating to concerns, complaints, or criticisms about ESG Services and BDS.
  • Identify and provide all documents ranking news sources or assessing their reliability for any of your ESG Services, and identify and provide the “blacklist” and “watchlist” of sources used by the Incidents team researchers.
  • Identify and provide the Human Rights Radar methodology document, process map, description of standard operating procedures, and analyst guidance document, including all draft, final, and updated versions thereof.
  • Identify and provide all documents and communications relating to the Global Standards Engagement 2018 report and 2021 update report containing bespoke research on the Israeli/Palestinian conflict area.
  • Identify and provide any document provided to or reviewed by White & Case in the course of preparing its May 11, 2022 report, “Report of Independent Investigative Counsel Regarding Alleged Anti-Israel Bias in Morningstar, Inc. ESG Products and Services” (“White & Case Report”).
  • Identify and provide all documents and communications with clients trying to dissuade them from doing business in and/or with Israel.
  • Provide all documents and communications between any GSE (Global Standards Engagement) engagement manager and any person or entity relating to business conducted in, with, or relating to the State of Israel, any Israeli/Palestinian conflict areas, and/or BDS.

The eighteen AGs who have joined Missouri’s include fifteen Republicans, whose states have been identified, and three others that are unidentified. The fifteen are Arkansas, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Montana, Nebraska, Ohio, Oklahoma, South Carolina, Texas, Utah, and Virginia.

All but Montana and Nebraska have anti-BDS laws. Montana got as far as passing a bill in the state House back in February 2017, but the effort got no further. A Nebraska lawmaker introduced an anti-BDS bill into the legislature in January 2022, but it was indefinitely postponed in April.

Since the other three states haven’t been identified, it is unknown whether they have taken action to combat the anti-Israel boycott movement. Several Democratic-run states have also passed anti-BDS laws.

On the other hand, the states may be motivated by a more generalized concern over efforts to impose woke policies on businesses. Pushback efforts against this have been much in the news lately. For instance, Gov. DeSantis of Florida (which is not one of the states included in the above list) has made some well-publicized efforts in that direction.

There is a great deal of overlap between the nineteen AGs investigating Morningstar and the nineteen states whose Attorneys General (led by Arizona’s AG) have written to the Securities and Exchange Commission asking it to investigate whether Blackrock was properly prioritizing its fiduciary responsibilities to its investors, given its ESG objectives as well as its ties to China. Those nineteen states are: Alabama, Arizona, Arkansas, Georgia, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Ohio, South Carolina, Texas, West Virginia, and Utah.


Donations tax deductible
to the full extent allowed by law.



This is what governing, using the lawful power the people give us and actually having coherent ideas looks like.

The Libertarian/Small Government thing is to do “MUH BIG GOVERNMENT BAAAADDDDD” and allow this to continue.

If you have any doubts government is legitimate and the antidote to bad Democrat government isn’t anarchism but GOOD government reread this article.

    CommoChief in reply to Danny. | August 23, 2022 at 5:30 pm


    Yes and no.

    In those areas where there has been an explicit grant of power for the creation of a particular agency to perform certain missions within clear constraints; sure good govt is preferred to bad govt. That doesn’t mean that all govt agencies or missions are necessary nor does it mean those missions shouldn’t be performed by the States instead of the federal govt.

    State AG banding together to sue a private entity in Federal CT, which is what’s happening here, isn’t a big govt v small govt argument. This is more accurately a consumer issue. Libertarians don’t believe in no govt, that’s the view of anarchists. Libertarians are better described as seeking the maximum individual liberty that doesn’t directly impact another’s maximum liberty within a system of limited govt power. True libertarians self regulate their maximum liberty to voluntarily account for the liberty of others. As an example, don’t play music at a volume to disturb others ability to enjoy silence. Don’t inflict yourself on others. Be courteous IOW.

      Are you confusing big government with government tyranny? This story is a tiny clique of senior government officials attempting to interpret a law a novel way in order to restrain a private corporation from trying to enact its agenda by use of finance on grounds of how it impacts other people when that company does so. While that is certainly not government tyranny it is the definition of big government.

      I also would contest that true libertarians wouldn’t favor letting corporations do this. The Libertarian candidate of 2020 most definitely does. The Libertarian theory is that companies like this one will go bankrupt if society doesn’t like it because competition will knock it out and government will just make it worst so stay out. It is a more honorable stance than the anarchist larp/Bush era because it is consistent around something like FISA courts and military spending (against both) but ultimately you could ask a hundred political science professors and get the same answer libertarianism is against exactly the sort of thing these AGs are doing.

      I agree there are sections of government (i.e. FISA courts) that simply shouldn’t exist and other sections (i.e. the IRS doubling) that could be cut back down to the size of just last year.

      I can’t be a small government guy however because I favor everything DeSantis has done, support the civil rights act that DeSantis modelled his war on CRT on, am a huge fan of the Marsh v Alabama ruling and believe we should protect our public square along those lines, and I think you agree with me on those sorts of things.

        CommoChief in reply to Danny. | August 23, 2022 at 11:11 pm


        I dont think you have a good grasp of what libertarians actually hold. One difference is the level of government. The actions of the States as sovereigns in their right is one thing. The actions of a National govt are another. A Statehouse is far more accesable than DC for most people.

        For 125 years or so the federal government was largely constrained. It wasn’t in the daily lives of most citizens outside the post office. Beginning with Wilson and accelerating with FDR the size and scope of the federal government became immense and frankly would be unrecognized by the founders. People can move to another State if their govt is jacked but leaving the entire nation is another issue.

        Federalism had been largely discarded by CTs and somewhat discredited during the civil rights era. Over the last twenty years the CTs have moved back to embrace Federalism; see Dobbs. A few Gov and AG are beginning to assert themselves to push back v our overly intrusive federal government and reclaim their place as the better, more effective closer to citizen option.

        As to libertarian positions that’s not the whole story. Your version leaves out the very important role of the CT system to enforce contact law. Defrauding customers with bogus data or propaganda doesn’t get a pass and a free market solution. Why would libertarians not be in favor of using the CT?

        That’s one of the functions of govt, a fair and impartial judiciary, that every libertarian supports. How else does someone hold to account this who would deny their liberty but the CTs? Remember that libertarians abide by the non initiation of violence principle, but they don’t turn the other cheek, they use force or lawyers as required to defend themselves and their liberty.

          Danny in reply to CommoChief. | August 24, 2022 at 3:12 am

          I have never heard of any libertarian arguing for expanding the scope of an existing law to handle a new problem.

          What I have seen from libertarians I have listened to (I don’t restrict myself to just people I agree with although I am much more likely to listen to programs I agree with) is more boilerplate slogans rejecting the DeSantis approach in favor of shouting only government can throw you in prison (so presumably if government agreed to only throw you out of society that would be fine). .

          What I have seen is also very consistent with what I have always been taught about what libertarianism means.

          The closest to a libertarian who advocates using laws as they exist now I could think of is Alan Dershowitz, although he does consider himself a liberal.

          CommoChief in reply to CommoChief. | August 24, 2022 at 12:28 pm

          The Galt’s Gulch brand of libertarian absolutism exemplified by some is unrealistic. We don’t live in apart from society in a libertarian ideal where there isn’t anything to contest.

          Instead we live in the real world of the federal administrative State incrementally expanding via mission creep. Real libertarians living in the world as it is fully embrace Federalism as a necessary check on the Federal govt as well use of the CT system to litigate for maximum individual liberty.

          Ideally the Federal government would be limited to the enumerated and listed powers of Art 1, Sec 8. No interpretations that X is probably ok, then ten years later since X was OK that justifies Y, which ten years later is used to justify Z. That’s how we ended up with an alphabet soup of federal agencies with a very tenuous connection to the powers listed in the Constitution.

          That’s the reality. Anyone telling you that libertarians believe we shouldn’t use the levers of power to reduce the intrusive scope of govt isn’t a libertarian. They are misapplied the adage that a ‘govt big enough to provide X is big enough to take Y’. That’s applicable when we decide whether to transfer the power to govt to provide X. Once a power is granted we would fools not to use that power to achieve our end goal of maximum individual liberty. Having done so then we can remove that particular power. Unilateral disarmament is a Cray Cray idea.

    txvet2 in reply to Danny. | August 23, 2022 at 5:59 pm

    Just because there’s a sometime need for a viable SEC to help ensure a fair marketplace doesn’t mean that there isn’t a reason to vastly reduce other parts of the bureaucracy – including, for instance, repealing the doubling in size of the IRS and eliminating such agencies as the DOE (both)..

      Danny in reply to txvet2. | August 23, 2022 at 10:34 pm

      I agree there are times and places that call for government and ones that don’t.

      I agree with you on the IRS, I actually love that civilians are in full control of all nuclear weapons development in this country so don’t agree the DOE should be outright disbanded the fatter you make the pentagon the worst you will make it. You did however admit you don’t want small government when you admitted there is a need for the SEC.

      SEC is always big government by definition everything it does is a big government act.

      You want DOE disbanded? Great I want FISA disbanded altogether and for us all to have the real American judiciary as the only judiciary. Thinking there are negative parts of the government isn’t the same as being pro-small government.

    dunce1239 in reply to Danny. | August 24, 2022 at 1:17 am

    morning-star removed from my favorites list.

For the sake of argument, a woke corporation such as Morningstar successfully overthrows a small country like Israel, which country gets targeted after that bloodbath? the US?

    Danny in reply to jolanthe. | August 23, 2022 at 10:37 pm

    Arguably they wouldn’t need to they impose their agenda via the private sector but lets say they do manage to overthrow a small country; they would likely move on to another small target. Big countries (i.e. the United States and Japan) do have the means to crush even the mightiest corporations in a way small countries just don’t.

      jolanthe in reply to Danny. | August 23, 2022 at 11:23 pm

      If woke corporations managed to overthrow a country that would certainly embolden them.

      It would also certainly embolden the outfit that seeks to replace Israel.

      If government is using or abetting woke corporations as proxies — well that’s another unpleasant idea.

        Danny in reply to jolanthe. | August 24, 2022 at 10:07 am

        Remember these megacorporations are already getting whatever they want so the benefits of controlling the government are almost non-existant.

        But they get nothing out of a dangerous hypothetical conflict with a power that could fight back they can’t get from a conflict with a power that can’t.

        Lets say after destroying Israel or Estonnia their ego inflates and they go after Japan.

        The Japanese wouldn’t win easily but they would win and they would more than likely be facing Japan+Europe+America and go into defunct status

        If say they decide after Israel they want to control the source of our cell phone batteries in places like Zimbabwe

        That would be a lot more tempting than a conflict with Japan they can’t win.

        Woke corporation alliance with woke government is yet another reason why we need to stop pretending neutrality is a thing and actually regulate these companies in our direction.

“ Woke corporation alliance with woke government is yet another reason why we need to stop pretending neutrality is a thing and actually regulate these companies in our direction.”

That is the crux of the matter.

Steven Brizel | August 25, 2022 at 9:53 am

Both Morningstar and Black Rock are engaged in woke advocacy as opposed to obtaining the maximum return on investments as fiduciaries for those who dependent on their purported savvy in investments