The coalition of organizations that has worked to remove anti-Israel bias from Morningstar’s Sustainalytics ESG (Environmental, Social, and Governance) ratings – Jewish Federations of North America, The Louis D. Brandeis Center for Human Rights Under Law, AJC, ADL and JLens – welcome the assessment that the company’s ratings no longer reflect anti-Israel bias.

“Our coalition believes structural anti-Israel bias is a form of antisemitism, and we applaud Morningstar’s efforts and good faith cooperation to root out anti-Israel bias from their products. The experts’ recommendations and the framework Morningstar developed should serve as a model for the entire ESG industry to ensure that credit ratings are not infected with anti-Israel bias,” the coalition said.

The coalition’s efforts built off work by JLens, supported by the Jewish United Fund of Metropolitan Chicago and experts with the Foundation for the Defense of Democracies, which discovered and reported that Sustainalytics’ ESG methodology was resulting in an extraordinarily disproportionate percentage of poor “human rights controversy” ratings applied to Israeli companies or companies operating in Israel. Faulty assumptions, poor sourcing, and flawed models threatened to deny these companies access to capital from ESG funds and mar their reputations. 

Last year, experts chosen by Morningstar, Prof. Michael Newton and Ambassador (ret.) Alex Wolff, made seven recommendations to eliminate anti-Israel bias in company ratings and ensure that Sustainalytics’ ESG product is among the most objective and accurate available. 

In their final report, published on December 31, 2024, the experts confirmed that Morningstar has “implemented a set of systematic reforms designed to address the potential risk of anti-Israel bias in Sustainalytics research and products” and that, “[a]s a result of these reforms, our research in evaluating implementation of our recommendations revealed no examples of companies directly or indirectly associated with the Israel/Palestinian conflict area (IPCA) whose evaluations were susceptible to anti-Israel bias in the Sustainalytics process.”

Before the experts were brought on, our coalition’s engagements with Morningstar had resulted in significant change. Last year, Morningstar removed unfair controversy ratings from over 100 firms operating in or doing business with Israel, a 94% decrease.
 
 
As the expert report notes, a neutral and objective ESG rating system must operate on the assumption that companies operating in Israel are "held to the same standards of corporate responsibility and action as any other companies operating anywhere else in the world." The experts’ initial report offers pointed guidance on how this neutrality can be achieved, and why such neutrality is essential to maintaining the integrity of the ESG process.