Morningstar, a multibillion-dollar investment research firm, says it will no longer sell a human rights research product to investors after a review found that it “exhibited bias” against Israel and conceded that the company had been “overly dismissive” of concerns raised by Jewish groups.
The announcement Thursday from the Chicago-based company came after Morningstar received the results of an independent review by the law firm White & Case into allegations that Human Rights Radar steered investors away from Israel by improperly inflating the country’s risk and controversy ratings.
Human Rights Radar, a product of Morningstar subsidiary Sustainalytics, is meant to provide investors with information on issues in the world where alleged human rights violations take place.
According to complaints first raised by JLens, which advocates for Israel in the investing world, Human Rights Radar’s biased ratings amounted to an antisemitic boycott of Israel. It had accused Sustainalytics of supporting the Boycott, Divest and Sanction (BDS) movement.
Morningstar said its report had not found evidence that Sustainalytics products recommended or encouraged divestment from Israel and there was no evidence of pervasive or systemic bias against Israel across Sustainalytics products.
However, it did find that the Human Rights Radar product “exhibited bias in its outcomes by overrepresenting firms linked to the Israeli-Palestinian conflict.”
The report also found that Human Rights Radar “sometimes used inflammatory language and failed to provide sourcing attribution clearly and consistently.”
As a result, Morningstar said it was dropping Human Rights Radar and would work to make Sustainalytics more transparent.
Morningstar also acknowledged that it had been overly dismissive of concerns raised.
“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,” the statement said.
Morningstar initiated the review two weeks before the IIPB was set to place the company on its blacklist, which would have barred state-run pension systems from investing in Morningstar.
Jewish groups welcomed the decision.
“This is a victory in the fight against the anti-Israel BDS campaign. Morningstar’s commitment to implement the many recommendations in their report will eliminate a key source of BDS support in the economic arena,” said JLens CEO Julie Hammerman.
“Jewish Federations and our partners work tirelessly to combat BDS and other efforts aimed at delegitimizing Israel, including policies and practices from the corporate sector to campus, which unfairly single out the Jewish state,” said Jewish Federations of North America President and CEO Eric Fingerhut. “We are proud of the communal efforts that have led to the independent investigation.”
JTA contributed to this report