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Morningstar ‘avoids anti-Israel investment ban’ in Illinois

Verdict follows an investigation by law firm White & Case into claims of anti-Israel activities at ESG data and ratings subsidiary Sustainalytics. 

The Illinois Investment Policy Board has voted against placing Morningstar on its “prohibited investment list”, a spokesperson for the firm has told Responsible Investor. 

The meeting occurred on 21 June and followed an investigation by law firm White & Case into claims of anti-Israel activities at Morningstar’s ESG data and ratings subsidiary Sustainalytics. 

According to a 117-page report, the law firm found “no evidence” that Sustainalytics products recommended or encouraged divestment from Israel, or that would suggest a “pervasive or systemic bias against Israel across Sustainalytics products, including the Sustainalytics ESG Risk Rating”. 

However, the firm’s Human Rights Radar was found to have a “latent, disproportionate focus on the Israeli/Palestinian conflict which results in biased outcomes”. The product, which provided information on companies operating in regions where Sustainalytics believed serious human rights violations were taking place, has been discontinued by Morningstar in response to recommendations by White & Case. 

Illinois law currently prohibits public pension funds from investing in companies that boycott Israel. 

The spokesperson for Morningstar told RI: “We were pleased with the outcome [of Tuesday’s meeting] and look forward to continue working with the IIPB and external stakeholders as we implement the recommendations of the White & Case independent report.”