A watchdog organization is calling on a leading investment company to end its allegedly antisemitic “environmental, social, and governance” policies.
The New Tolerance Campaign, which encourages “Americans to confront intolerance double standards by establishment institutions, civil rights groups, universities, and socially conscious brands,” claims that investment giant Morningstar is discriminating against Israel through “boycott, divestment, and sanctions” activism.
“There was a subdivision of Morningstar responsible for formulating investment policies that fall in line with ‘diversity, equity, inclusion’—otherwise known as ‘DEI,’” Gregory Angelo, the president of the New Tolerance Campaign, told The Daily Signal in a phone interview.
In order to ensure socially conscious investment, Morningstar’s subsidiary rated companies that do business with nations that have concerning records of terrorism, authoritarianism … and made recommendations as to which companies to invest in or not to invest in, based on the ties they have with certain countries.
And that’s how this all came about. Israel found itself on the same watchlist as other nations that have objectively horrendous human rights records, that are objectively currently on terrorist watchlists, and they completely ignore the fact that Israel is the only democracy in the Middle East.
More than 500 messages have been sent to Morningstar’s executive leadership and communications team since the campaign launched on Sept. 29, Angelo said.
“These are people around the country in all 50 states who are extremely concerned generally with the fact that woke policies are winding their way into corporate America,” Angelo added.
“But specific to Morningstar, [they] are very concerned about the application of [environmental, social, and governance] principles that put Israel on the same investment watchlist as authoritarian and terrorist nations like Iran, China, and Russia,” he said.
Rabbi Yaakov Menken, the managing director of the Coalition for Jewish Values, told The Daily Signal in an email that “boycott, divestment, and sanctions” is “just a new name for the Arab League boycott of 1945, which sought to punish Jews for attempting to create a refuge in their Holy Land.”
“Its poison actually goes back to the Nazi boycott of 1932, and beyond,” Menken added. “There is no intersection between BDS and anything positive, but it has a direct link to a long history of hate.”
A group of 17 Republican state attorneys general expressed their “serious concerns” in a letter on Aug. 23 to Morningstar’s lawyers over the investment group’s alleged boycott, divestment, and sanctions activism.
“[W]e write with serious concerns related to reports that Morningstar—through its wholly owned subsidiary, Sustainalytics—may be furthering the [boycott, divestment, and sanctions] movement against Israel,” the attorneys general wrote in their letter.
The movement “is an [antisemitic] campaign to intimidate the Jewish people and delegitimize the state of Israel,” the attorneys general wrote, adding that it “advances these aims through academic, cultural, and economic initiatives that punish people and firms for doing business with Israel.”
The law firm White & Case LLP conducted an investigation into Morningstar’s alleged anti-Israel bias and its environmental, social, and governance products and services after some investors raised concerns over “anti-Israel discrimination” in the company’s practices, The Times of Israel reported.
The investigation, which was published in May, found “no evidence Sustainalytics products recommended or encouraged divestment from Israel” and “no evidence of pervasive or systemic bias against Israel across Sustainalytics products, including the Sustainalytics [environmental, social, and governance] risk rating,” according to a letter from Morningstar’s executive chairman, Joe Mansueto, and Morningstar CEO Kunal Kapoor.
The letter noted an instance of bias found in the investigation for the Sustainalytics product Human Rights Radar for “overrepresenting firms linked to the Israeli-Palestinian conflict.” Morningstar no longer uses Human Rights Radar.
The letter also highlighted that “the investigation found scattered instances of processes and procedures that can be improved to address and mitigate potential for implicit or confirmation bias.”
Richard Goldberg, a senior adviser for the Foundation for Defense of Democracies, however, slammed Morningstar and the White & Case investigation in a June memo.
“Morningstar thinks an outside investigation of Sustainalytics solved its anti-Israel bias. The report, however, reveals just how pervasive and systemic that bias remains,” wrote Goldberg, who previously served as the White House National Security Council’s director for countering Iranian weapons of mass destruction, adding later:
Sustainalytics relies heavily, if not quite exclusively, on deeply flawed, anti-Israel sources, including anti-Israel nongovernmental organizations (NGOs) such as Who Profits, Human Rights Watch, and Amnesty International.
Companies that are in any way involved in the Israeli economy are automatically identified as complicit in human rights abuses in all Sustainalytics’ core products and are thus disproportionately punished in Sustainalytics ratings compared to companies doing business in any other country.
“We know the Left has already used [environmental, social, and governance] policies to push their agenda on climate radicalism, abortion-on-demand, and woke gender ideology, but now these … policies are becoming a vehicle for [antisemitism],” Jessica Anderson, executive director of Heritage Action for America, the grassroots arm of The Heritage Foundation, told The Daily Signal in an email. (The Daily Signal is the news outlet of The Heritage Foundation.)
Investment firms like Morningstar are neither serving their clients, nor any kind of alleged social good by promoting the [antisemitic boycott, divestment, and sanctions] movement and comparing Israel to some of the world’s worst human rights abusers like China, Iran, and Russia.
Morningstar’s decision to use [environmental, social, and governance] ratings to deny investment in corporations with ties to Israel only further highlights the dangers of [that] movement and the urgency with which we need to fight back.
“Morningstar does not support the anti-Israel [boycott, divestment, and sanctions] movement,” a Morningstar spokesperson insisted in an email to The Daily Signal. Morningstar did not respond to a follow-up email Wednesday requesting further comment.
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