Pro-Israel Advocates Motivate Investment Firm to Steer Clear of BDS Movement Goals

Pro-Israel Advocates Motivate Investment Firm to Steer Clear of BDS Movement Goals

Edited by: Fern Sidman

Pro-Israel advocates and their supporters are declaring a victory against the notorious Boycott, Divestment and Sanctions Movement that seeks to isolate and destroy Israel. A recently published report in JTA indicated that a financial services company vowed to make changes to avoid inadvertently steering investors away from Israel.

After being the subject of a two-year campaign by pro-Israel activists, the company, known as Morningstar has issued denials that they were conducting a “soft” boycott of Israel as the Israel supporters had argued. The JTA reported that as a result of their campaign, Morningstar has requested that a law firm conduct a review of its policies and practices.

Last Thursday, Morningstar released a 117-page report.

The investment company has claimed that the results of the law firm’s investigation revealed that no evidence exists of systemic bias against Israel, according to the JTA report.

The wire service also reported that Morningstar did say that it would revise and/or modify “certain practices that could have had inadvertent impacts on its advice to clients looking to screen their investments based on environmental, social, and governance factors, known as ESG factors in the investing world.”

JTA reported that the alterations to Morningstar’s practices that were precipitated by the significant cadre of pro-Israel supporters who applied pressure to the company will be thoroughly scrutinized and carefully observed as Morningstar is one of the leading firms in the field of ESG investing.

Those who have taken an ideological stance in opposition to the concept on which ESG is predicated upon are expected to seek out some kind of leverage in their campaign on the issue, as was reported by JTA.

In a June 2nd letter to the Morningstar community, Executive Chairman, Joe Mansueto and CEO, Kunal Kapoor wrote that they had “engaged the outside law firm White & Case LLP to conduct that investigation. White & Case interviewed more than 40 employees and external parties while reviewing around 140,000 Sustainalytics documents, client-facing reports, and other materials.”

They added that “soon after we acquired ESG ratings and research firm Sustainalytics, we began receiving questions about whether some of Sustainalytics’ research practices reflected bias against companies operating in Israel, including charges that Morningstar and Sustainalytics supported the Boycott, Divestment, Sanctions (BDS) movement. To address those questions, we conducted an internal investigation and published our findings in March 2021.

We stated then—and reaffirm today—that neither Morningstar nor Sustainalytics supports the anti-Israel BDS campaign. However, in 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. We consider bias unacceptable in any form and concluded that the concerns warranted a thorough, independent review.”

The two officials said that as a result of White & Case’s investigation, “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.”

They added that, “We have greatly appreciated their candid feedback and thoughtful perspective, and given what we have learned, we want to thank JLens, the Illinois Investment Policy Board, and other interested parties for focusing our attention on these issues. We hope this dialogue, coupled with the actions we have taken to investigate this matter and adjust our policies, procedures, and products, underscores our commitment to conducting research in a way that upholds our principles.”

JTA reported that advocacy groups focused on issues such as human rights or the environment will likely worry about whether the Morningstar announcement spells a setback for their efforts.

Jlens is a Jewish investor network, as was reported by JTA and had repeatedly accused the company of improperly inflating Israel’s risk and controversy ratings, arguing that such behavior amounts to an antisemitic boycott of the country.

In a statement to the general media and the media, JLens CEO Julie Hammerman said, “This is a victory in the fight against the anti-Israel BDS campaign. Morningstar’s commitment to implement the many recommendations in their report will eliminate a key source of BDS support in the economic arena.”

Those who support the goals and objectives of the BDS movement were concerned about the implications of Morningstar’s announcement.

A group of activists opposite Jlens on the BDS issue lamented the announcement from Morningstar, pointing to the finance world as an important lever for putting pressure on Israel.

JTA reported that Lesley Williams, a member of Jewish Voice for Peace and co-coordinator of the Illinois Coalition For Justice Equality and Free Speech, said in a statement, “As organizations committed to justice for Palestinians, we are of course disappointed, not only because of the harm caused to Palestinians but also because of the overall potential weakening of human rights standards in investing, that under pressure from JLens and the Illinois Investment Policy Board, Morningstar has decided to discontinue its Human Rights Radar.”

“Companies that violate the human rights of Palestinians or who benefit from the violation of those rights can be rated accordingly,” Williams added, as was reported by JTA.