Morningstar commits to addressing anti-Israel bias in bid to avoid blacklist

The investment firm has not been cleared of wrongdoing and will continue to be monitored. 

By World Israel News Staff

Multibillion-dollar investment firm Morningstar, which came under scrutiny earlier this month for providing investors with an analytics tool that was found to be biased against Israel, has committed to resolving “anti-Israel attitudes” within its company in a bid to avoid being blacklisted, the Jewish Insider reported on Wednesday.

The Committee on Israel Boycott Restrictions, a subdivision of the Illinois Investment Policy Board (IIPB), unanimously voted in a meeting last week not to place Morningstar on the state’s “prohibited investment list,” on the condition that the Chicago-based firm commits to implementing a series of measures combating its anti-Israel bias.

The recommendations were outlined in two reports: the first was published by the Foundation for Defense of Democracies (FDD) and the second was the result of an independent inquiry by the White & Case LLP law firm. They include a focus on transparency, internal consistency, addressing conflicts of interest and an end to Morningstar’s reliance on reporting from “anti-Israel sources.”

The FDD also requested that the firm “address [the] unfair policy of punishing businesses just for operating in Israel.”

Morningstar’s decision earlier this month to drop the human rights radar tool, which was employed by its subsidiary Sustainalytics, came after it received the findings from the inquiry.

The company concluded that the tool marketed to investors consciously steered them away from Israel by misguiding them on how the Jewish state deals with a range of environmental, social and governance (ESG) issues, including climate change, treatment of employees and impact on neighboring communities.

According to the Jewish Insider, Morningstar characterization of the meeting contradicted accounts provided by other attendees. Morningstar failed to mention the condition of implementing the FDD’s proposals, the report said, prompting one attendee to comment that the investment firm was “playing fast and loose with the truth to avoid a shareholder backlash.”

Andy Lappin, who chairs the Committee on Israel Boycott Restrictions, described Morningstar’s characterization of the meeting as “disturbing”.

A vote to clear Morningstar of all wrongdoing and end monitoring of the company failed to garner enough support to pass, Lappin told the news site, and added that the firm was due to face the board again in September.

“They’re still under the microscope and the investigation from our perspective is on a lower flame, but still ongoing,” said Lappin.

In 2015, Illinois became the first state to push a law requiring state pension funds to divest from companies that support the Boycott Divestment Sanctions (BDS) movement against Israel.