Summary: JLens’ Campaign to Combat BDS at Morningstar
JLens’ campaign to combat Morningstar’s support for the anti-Israel BDS campaign started in 2020 and is the genesis of the current advocacy efforts with Morningstar. For over a decade, BDS activists have manipulated the ESG (environment, social, governance) responsible investing field to promote an anti-Israel, antisemitic, and hate fueled one-sided political campaign intended to harm Israel's economy and question its legitimacy. While Morningstar initially claimed JLens’ concerns were ‘grossly inaccurate and without merit,’ the company has since changed course and agreed to address the anti-Israel bias and promotion of BDS while expressing ‘a debt of gratitude to JLens for pushing Morningstar to be a better company.’
Morningstar Corporate Overview:
Morningstar Inc. is a U.S. public company headquartered in Chicago that sells investment research and oversees $215 billion in assets. In 2020, Morningstar acquired Sustainalytics, a Dutch company that sells ESG (Environment, Social, Governance) research to support socially responsible investing. Sustainalytics is one of the most sophisticated enablers of the anti-Israel BDS (Boycott, Divestment, Sanction) campaign in the global investment field.
JLens is a nonprofit investor network established in 2012 that explores a Jewish lens on investing and serves as a bridge between the Jewish community and the socially responsible investing (SRI) and corporate social responsibility (CSR) arenas. JLens oversees the Jewish Values Global Index (ticker: SHALOM), and the Jewish Advocacy Strategy US, a $200 million Jewish values-based offering that invests in 300 US companies and conducts investor advocacy on Jewish communal concerns.
JLens’ Analysis on Morningstar’s BDS Support:
JLens has concluded that Morningstar’s products and services support BDS:
Morningstar advises institutional investors how to divest from Israeli and/or BDS targeted companies, and maintains divestment lists of companies with ties to Israel
Morningstar advocates for companies to divest Israeli operations or cease sales to Israeli entities including the Israeli military and government
Morningstar’s ESG research punishes companies with ties to Israel by elevating their controversy and risk scores, making those companies less attractive for investment
Morningstar discriminates against companies with ties to Israel by relying on antisemitic, anti-Israel, and extremist sources in their ESG research reports
Companies are penalized disproportionately in Morningstar’s scoring for operating in Israel
JLens’ Engagement History with Morningstar:
April 2020: Morningstar announced plans to acquire Sustainalytics. JLens contacted Morningstar’s CEO to share concerns related to Sustainalytics anti-Israel bias and BDS support. Morningstar refused to speak with JLens until after the Sustainalytics acquisition was finalized.
November 2020: JLens again reached out to Morningstar’s CEO and a meeting was arranged with Sustainalytics employees.
January 2021: After unproductive dialogue with Sustainalytics employees, JLens determined that Morningstar was not committed to engaging in good faith dialogue and the company was added to JLens’ Do Not Invest list.
February 2021: JLens submitted a bylaws shareholder proposal to be presented at the Annual Shareholders Meeting.
March 2021: Morningstar released a statement on their website claiming an internal investigation found JLens concerns to be false, while at the same time acknowledging that BDS news reports influence their ESG research and providing examples of companies they score as controversial due to Israeli military contracts.
May 2021: JLens presented the resolution related to Morningstar’s support for BDS at the Annual Meeting. Morningstar’s Chairman read a statement claiming JLens concerns are false and announced the board voted unanimously against JLens resolution.
October 2021: The Jewish United Fund of Metropolitan Chicago, an investor in JLens’ Jewish Advocacy Strategy, facilitated a dialogue between JLens and Morningstar’s Executive Chairman. The discussions addressed Morningstar’s support for BDS, the lack of moral leadership by Morningstar to date with the publication of misleading statements and the company’s failure to address the serious concerns that have been raised by stakeholders, and JLens’ request for an independent third-party investigation.
December 2021: Morningstar announced that the law firm White and Case had been hired to conduct an independent investigation, and Morningstar committed to publishing the final report.
June 2022: Morningstar releases the White and Case report and agrees to implement the report’s recommendations, dealing a significant blow to the BDS campaign by eliminating Morningstar’s role as a key conduit of BDS activism in the economic arena. However, the White & Case report is a work of legal acrobatics whereby the findings conclude Morningstar is primarily innocent of extreme definitions of wrongdoing, while the report body and recommendations clearly demonstrate the extensive role Morningstar (Sustainalytics) has played in promoting and profiting from the BDS campaign. Transparency and clarity on the implementation of the report's recommendations are required to assess whether Morningstar has truly ceased supporting the anti-Israel BDS campaign.
Morningstar will remain on JLens’ Do Not Invest list until we are convinced that the company has successfully changed course and no longer supports BDS. JLens advocacy on this campaign is ongoing.