Several state treasurers, state auditors, and members of the State Financial Officers Foundation sent a letter to Morningstar’s Chief Executive Officer Thursday, accusing his company of anti-Israel bias in their Environmental, Social and Governance (ESG) scores.
“After reviewing your corporate statements of March 2021 and June 2022, an independent review conducted by White & Case, a follow-on analysis of the said report, and a recent letter sent to Morningstar by dozens of national and regional Jewish organizations around the country, it is clear to us that the environmental, social, governance (ESG) research and ratings products offered by Sustainalytics are deeply infused with anti-Israel bias,” the letter reads.
“As state financial officers, we have a fiduciary duty to ensure that the financial research our respective states rely upon is based on sound financial principles rather than BDS movement tactics meant to isolate Israel in the world economy and breed prejudice against the Jewish people,” the letter continues. (RELATED: Wall Street Does Damage Control After GOP Targets Woke Capital)
Kunal Kapoor, CEO of Morningstar, a Chicago financial services firm that provides investment research, responded to allegations that his firm follows the Boycott, Divestment and Sanctions (BDS) movement in the Wall Street Journal in July. Kapoor was responding to an article in the WSJ by David May and Richard Goldberg of Foundation for Defense of Democracies, a non-profit focused on national security and foreign policy, which claimed that Morningstar’s subsidiary Sustainalytics, “relies heavily on deeply flawed, anti-Israel sources to produce ESG ratings and research, and automatically finds companies involved in parts of Israel’s economy to be complicit in human-rights abuses.”
“Morningstar does not support the anti-Israel BDS campaign,” a Morningstar spokesperson told the Daily Caller.
“There are companies placed on a ‘watchlist’ that Sustainalytics employees acknowledge is used as a ‘do-not-invest list,'” Derek Kreifels, CEO of the State Financial Officers Foundation, told the Caller. “Additionally, companies overall ESG risk ratings are impacted by ‘controversies’ attributed to the Israeli-Palestinian conflict.”
I’m appalled by the BDS criteria used by Morningstar/Sustainalytics in their financial research.
— Treasurer Robert Sprague (@OhioTreasurer) August 25, 2022
Arsen Ostrovsky, CEO of The International Legal Forum, a network of lawyers and organizations that specialize in fighting legal battles against anti-Semitism, says Morningstar uses ESG to cover its support for the anti-BDS movement.
“Morningstar has essentially been engaging in BDS practices and economic warfare, by deceptively cloaking its systematic anti-Israel bias under cover of their ESG policy,” Ostrovsky said in a statement provided to the Caller.