Morningstar Agrees to Eliminate Anti-Israel Bias In Investment Rating System
Back in August, LIF reported that 19 state attorneys general (spearheaded by Missouri AG Eric Schmitt) had launched an investigation into the investment management firm Morningstar, Inc. The investigation was to determine whether Morningstar had violated consumer-protection law and unfair trade practices, based at least partly on its anti-Israel practices.
The allegations arose after Morningstar bought Sustainalytics, a Dutch Environmental, Social, and Governance (ESG) ratings and research firm known to be biased against Israel. Although Morningstar denied supporting the boycott, divestment, and sanctions movement (BDS), the company and its Sustainalytics subsidiary have been accused of utilizing anti-Israel sources and weighing them disproportionately in assigning ESG risk ratings to companies as guidance for socially-minded investors. The ratings assigned a higher risk simply for doing business in or with Israel or in Israel-controlled territories.
On October 31, 2022, Morningstar reached an agreement with several pro-Israel organizations to root out its anti-Israel bias.
Morningstar has committed to several new practices, including:
- Barring the use of biased sources, such as the UN Human Rights Council and WhoProfits, from its reporting
- Using geographic names (e.g., West Bank, east Jerusalem) in relevant regions, rather than “Occupied Palestinian Territory”
- Ensuring that businesses operating in Israeli-Palestinian conflict areas or contributing to Israel’s defense against terrorism are not treated as de facto violators of human rights
- Removing references to the BDS campaign
- Providing ongoing anti-bias training to staff
- Bringing in independent experts to ensure that ESG ratings do not single out and discriminate against Israel
Groups involved in the Morningstar negotiations include The Jewish Federations of North America, Anti-Defamation League, American Jewish Committee, JLens, the Foundation for Defense of Democracies, and The Louis D. Brandeis Center for Human Rights Under Law, in coordination with the Conference of Presidents of Major American Jewish Organizations, Hadassah the Women’s Zionist Organization, Jewish Funders Network, Combat Antisemitism Movement, Jewish United Fund of Metropolitan Chicago, UJA-Federation of New York, and Christians United for Israel.
LIF reached out to the office of Missouri’s Attorney General for comment. According to Christopher Nuelle, the AG’s Press Secretary, Schmitt has no comment at this time.
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