Morningstar severs ties with product due to anti-Israel bias

The investment firm cut the biased Human Rights Radar tool amid pressure from Jewish groups. 

By World Israel News Staff

Multibillion-dollar investment firm Morningstar has severed ties with a human rights research product after it found that it was biased against Israel.

The Chicago-based company concluded that the Human Rights Radar 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.

Morningstar’s decision to drop the HRR tool, which was employed by its subsidiary Sustainalytics, came after it received the findings an independent inquiry by the law firm White & Case.

“The decision was made because Human Rights Radar, which Morningstar picked up in its acquisition of Sustainalytics, exhibited bias in its outcomes by overrepresenting firms linked to the Israeli-Palestinian conflict,” a letter from Mornigstar’s Executive Chairman Joe Mansueto and Chief Executive Officer Kunal Kapoor read.

While White & Case concluded that the HRR “sometimes used inflammatory language and failed to provide sourcing attribution clearly and consistently,” it found.that there was no evidence of pervasive or systemic bias against Israel across Sustainalytics products.

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JLens, which represents a network of Jewish investors, put Morningstar on its “do not invest list” over alleged support of the anti-Israel boycott, divestment and sanction (BDS) campaign.

In its letter, Morningstar conceded that it had been “overly dismissive” of concerns raised by JLens and other groups.

“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,” it read.

Rachel Lerman, vice-chair of the Louis D. Brandeis Center for Human Rights Under Law, an advocacy group that fights antisemitism on college campuses, said that while “Morningstar is to be commended for halting its use of HRR, the investigators’ findings raise bright red flags, not only about HRR but about […] ESG in general.”

“Using the opinions of [BDS] groups to assess a company’s performance, legal status, or behavior raises series concerns about objectivity. ESG research companies should base risk assessments on verifiable facts and legal expertise, not biased reporting,” Lerman said in article published in The Jerusalem Post on Tuesday.