Arizona treasurer says investment firm Morningstar violates state anti-BDS law - Maccabee Task Force
Significant changes are needed in how Morningstar’s subsidiary Sustainalytics rates companies doing business in Israel and Judea and Samaria, writes the treasurer to Morningstar’s CEO.

Arizona’s state treasurer put investment firm Morningstar on notice that it is violating the state’s anti-BDS law.

Last week, Arizona State Treasurer Kimberly Yee wrote a letter to Morningstar CEO Kunal Kapoor, giving him 30 days to explain how the company is in compliance with the law. Otherwise, wrote Yee, Morningstar will be placed on the state’s list of prohibited investments.

Yee cited a report by law firm White & Case which was commissioned by Morningstar in determining that Morningstar’s subsidiary, investment ratings company Sustainalytics, “uses anti-Israel and anti-Semitic sources to negatively impact the scores of companies doing business in Israel and in Israeli-controlled territories.”

Morningstar has often pointed to the White & Case report, which recommended dozens of changes in Sustainalyics’ processes in order to eliminate the chance of anti-Israel bias in its ratings, as proof that the company is not engaging in a boycott of Israel.

Unconvinced, Yee wrote to Kapoor, saying “I will not allow companies to promote policies that are anti-Semitic and discriminatory efforts against Israel, which is America’s longtime friend and ally, and a significant trade partner with Arizona.”

Sustainalytics specializes in providing investors with ratings for companies based on their environmental, social and governance (ESG) policies. Yee and other Morningstar critics allege that Sustainalyics uses well-known anti-Israel sources and weighs them disproportionately in creating an inherently anti-Israel ratings system that punishes companies doing business in and with Israel, along with Judea and Samaria.

“The very fact that Sustainalystics has chosen to review companies doing business in Israel under the guise of its ESG rating system violates Arizona law as your company is ‘performing actions that are intended to limit commercial relations with entities doing business in Israel,’ ” Yee wrote in her letter.

She provided Kapoor with a 30-day window to “potentially cease issuing or revise the process for preparing reports and research under the guise of ESG as it relates to companies doing business in Israel.” Yee also required that Morningstar provide an averment that they “will not engage in any future boycott activities against Israel.”

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