NY lawmaker seeks investigation on investment firm over alleged anti-Israel bias

In one of the latest high-profile BDS disputes, a New York Democratic state lawmaker is urging the state attorney general to investigate an alleged anti-Israel bias of an investment firm.

Morningstar, a Chicago-based investment firm, has been facing repeated public criticism for the past several months over what critics say is an unfair ESG (environmental, social, governance) rating system that appears to be biased against Israel.

This latest accusation comes from lawmaker Dan Rosenthal, who called on the state's attorney general Leticia James to investigate Morningstar for anti-Israel bias.

It is unclear what aspects of Morningstar's ESG rating system are being questioned. However, the system is meant to serve as an assessor of ethical corporate practices, such as environmental and fair labour practices. If it is simply going by these metrics, Israeli companies may not be meeting certain ethical standards.

An outside review commissioned by the firm was conducted, which proposed reforms, though Morningstar denies ever supporting BDS.

According to a report by Jewish Insider, Rosenthal wrote that he "remain[s] skeptical" of the conclusions of the outside report, which identified "latent, disproportionate focus on the Israeli/Palestinian conflict which results in biased outcomes" within "one siloed product," but denied "pervasive [or] systemic bias against Israel in Sustainalytics' products or services."

The article noted that the lawmaker referred to a report by the conservative think tank the Foundation for Defense of Democracies claiming that the firm showed "pervasive and systemic" anti-Israel bias.

The allegations against Morningstar go back years but have only recently been featured prominently in the media due to accusations of BDS involvement by the firm, which it has repeatedly denied.

While many conservatives are critical of ESG ratings in general, due to their emphasis on the environment and social responsibility, Rosenthal emphasised that he supported the rating system, except when it appears to show support for BDS.

"Beyond the paramount goal of ensuring financial services firms operating in New York remain free from the influence of the anti-Semitic BDS movement, the ESG component of this investigation is critical," he wrote, according to Jewish Insider. "New York State cannot allow the BDS movement to damage the credibility of Israeli-based companies anymore than we can afford to delay private investment in socially conscious companies building a better world."