Morningstar Announces Steps to Address Anti-Israel Bias Concerns in ESG Research

October 31, 2022

Morningstar is committed to objectivity, transparency, and consistency across its research 

CHICAGO, Oct. 31, 2022 – Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research today announced new, additional measures to address the anti-Israel bias concerns raised by the Jewish Federations of North America, the Anti-Defamation League (ADL), the American Jewish Committee, JLens, the Foundation for Defense of Democracies, and the Louis D. Brandeis Center for Human Rights Under Law, in coordination with the Conference of Presidents of Major American Jewish Organizations, Hadassah – the  Women’s Zionist Organization of America, Jewish Funders Network, Combat Antisemitism Movement, Jewish United Fund of Metropolitan Chicago, and UJA-Federation of New York, regarding Sustainalytics’ ESG research products. These steps mark the culmination of Morningstar’s months-long engagement process with these organizations and resulting commitments to further fortify Sustainalytics’ ESG research and ratings against any concerns of anti-Israel bias. 

"Morningstar strongly reinforces the fact that we repudiate the Boycott, Divest, and Sanctions campaign. We are grateful to JLens for first raising these issues, and that the Jewish Federations of North America, the ADL, the American Jewish Committee, JLens, the Foundation for Defense of Democracies, and the Louis D. Brandeis Center for Human Rights Under Law, engaged with us in a thoughtful and productive manner in the spirit of sharing perspectives that can help our research be better for investors,” said Joe Mansueto, executive chairman, Morningstar. “I thank the coalition for bringing their deep expertise on Israel and antisemitism and our Sustainalytics team for providing extensive background and analysis to have these important, meaningful discussions and help find common ground.” 

Morningstar previously committed to adopt all the recommendations from an independent investigation into anti-Israel bias allegations. Additionally, following this engagement process, Morningstar commits to take the following actions: 

  1. Sustainalytics will provide additional documented guidance to ensure that its analysts understand that business activity, including but not limited to sectors such as telecommunications, banking, real estate, and construction, within the regions linked to the Israeli-Palestinian conflict or related to Israel’s defense against terrorism, do not give rise to a presumption that there is a human rights concern.
  2. Sustainalytics will use geographic names (e.g., West Bank, East Jerusalem) in relevant regions, rather than terms such as “Occupied Palestinian Territory” or “occupied territory.”  
  3. Sustainalytics will make several changes to hone its approach to media and other sources that it leverages as part of its research into companies’ involvement in controversies: remove sources that following a review with independent third-party experts are determined to be biased and unreliable; limit mention of divestment activities if they do not create significant risk to a company and cannot be corroborated by additional approved sources; and remove references to the Boycott, Divest, and Sanctions campaign. Sustainalytics will immediately terminate the use of several sources, including the United Nations Human Rights Council, among others. As part of the sources review process, Sustainalytics will immediately suspend the use of WhoProfits.
  4. Sustainalytics will provide ongoing anti-bias and antisemitism training to research staff, including analysts, to continually work towards a goal of not having anti-Israel bias in sources and terminology and bolster in-house expertise with staff members focused on human rights and conflict zones. 
  5. Morningstar will seek advice regarding its assumptions, sources, and use of language from independent, recognized experts in international law, including international human rights law, who are well-versed in the policy, security, history, and religious and legal context of the Israeli-Palestinian dispute.  

“We believe constructive criticism can make our research better. We entered the engagement process with the intention of being transparent, listening, learning, and taking appropriate action. These improvements, coupled with the actions we have taken to date, underscore the spirit of purpose and good faith we have brought to this dialogue,” said Kunal Kapoor, chief executive officer, Morningstar. 

Morningstar and the coalition group look forward to continuing to engage in regular dialogue with data transparency during such regular interactions, to measure progress while Morningstar Sustainalytics implements the improvements.  

About Morningstar 

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $239 billion in assets under advisement and management as of September 30, 2022. The Company has operations in 29 countries. For more information, visit Follow Morningstar on Twitter @MorningstarInc. 


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