February 25, 2021 - Last month, JLens announced to our investor network that we have added Chicago-based Morningstar Inc. to JLens’ Do Not Invest list due to economic warfare tactics against Israel in Morningstar’s ESG products and services:

• Morningstar’s Engagement Services pressure BDS-targeted global companies with business ties to Israel to divest Israeli operations or cease sales to Israeli entities.
• Morningstar’s Controversy Reports support the BDS campaign by elevating the controversy rating of BDS-targeted companies, which in turn raises those companies’ overall ESG Risk ratings. Raising the ESG Risk rating of a BDS-targeted company precludes investment by many socially responsible investors and funds that rely on Morningstar data for investment decisions.
• Morningstar’s ESG Risk Ratings incorporate BDS blacklists and use politicized anti-Israel language in the report commentary.
• Morningstar’s Human Rights Radar Report narrowly focuses on three disputed territories “Palestine, Western Sahara and Tibet,” as determined by client demand rather than objective analysis, while ignoring over 100 other disputed territories globally.
• Morningstar’s Global Standards Screening enables institutional investors to divest from BDS-targeted companies. 

Morningstar’s Response
Morningstar has responded to JLens announcement by explaining it as a “disagreement” and claiming the company “does not support the anti-Israel BDS (Boycott, Divestment, Sanction) campaign.” However, Morningstar's statement acknowledges that their “controversy assessments evaluate a firm’s activities that may violate human rights” and “in cases where companies’ activities are out of compliance with global standards, Sustainalytics [a Morningstar company] attempts to engage with the company on behalf of institutional investors to affect change.”
We believe that Morningstar’s carefully worded response purposely avoids addressing JLens’ conclusions. Despite Morningstar’s denial, JLens fully stands behind our analysis and conclusions listed above.

Questions for Morningstar
It is challenging to understand the many ways that Morningstar’s ESG products and services support BDS. The company is not transparent and hides behind paywalls, client agreements, and private meetings with companies. We have received a number of questions from investors in Morningstar and/or subscribers to Morningstar’s investment research. For those seeking to independently evaluate the company, this question list may be useful. 

JLens Submits First Anti-BDS Shareholder Proposal
Since the launch of the BDS campaign, 79 BDS-related shareholder proposals have been filed with US companies. Earlier this month, JLens submitted the first anti-BDS shareholder proposal. Our proposal, to be presented at Morningstar’s May 2021 Annual Meeting of Shareholders, addresses the company’s promotion of BDS in ESG products and services. The proposal asks the Board of Directors to prepare a report for investors on the extent of potential legal, financial, and reputational risks associated with the economic activism against Israel found in Morningstar’s business lines. Click here to read the full shareholder proposal.

ESG Indexes and Funds Based on Morningstar’s ESG Research
Unfortunately, Morningstar’s anti-Israel bias has widespread reach as many firms and funds rely on Morningstar’s ESG Research. While Morningstar does not provide the full list of firms and funds that rely on their ESG Research, here is a list of indexes and funds that Sustainalytics has constructed and maintained. This list includes funds from NEI Investments, Goldman Sachs, JPMorgan, Envestnet, STOXX, Natixis, Blackrock, and more. Given Morningstar’s tagline of “Illuminating Investing Worldwide,” we hope the company will shine a light on the full list of funds and other investment strategies that rely on their ESG research, so investors can make informed decisions to avoid investments that incorporate anti-Israel bias if they so choose.
 
Related Information

• Jerusalem Post article: “JLens Places Illinois Company on Do Not Invest List Due to BDS Activity” 
• NGOMonitor Report: “Sustainalytics: Amplifying BDS Through Business and Human Rights Rhetoric”