Podcast: Scott Shay on How BDS Crept Into the Investment World, and How It Was Kicked Out

Until recently, campus BDS resolutions were being used to penalize companies doing business in or with Israel. This week’s podcast guest explains how he helped put a stop to it.

In July 2021, a pro-Palestinian activist protests against Puma for sponsoring the Israeli Football Association. Mark Kerrison/In Pictures via Getty Images.

In July 2021, a pro-Palestinian activist protests against Puma for sponsoring the Israeli Football Association. Mark Kerrison/In Pictures via Getty Images.

Nov. 4 2022
About the authors

Scott Shay is the co-founder and chairman of Signature Bank and the author of several books, including Conspiracy U (2021).

A weekly podcast, produced in partnership with the Tikvah Fund, offering up the best thinking on Jewish thought and culture.

This Week’s Guest: Scott Shay


In recent years, a new movement has shaken the world of finance. Many investors are no longer interested in the financial return on their investments alone, but they want to feel that they are investing in companies that align with their ethical values. In response, a new metric was created: the ESG score, which attempts to measure the environmental, social, and governance factors and attitudes present in any given company.

A few years ago, it was discovered that Morningstar, one of the most prominent of the agencies that create and rank ESG scores, was disproportionately giving companies that are located in, or do business with, Israel lower scores. After discovering this systemic practice, Scott Shay, the chairman of Signature Bank, worked together with leaders in the Jewish institutional world to confront Morningstar and persuade it to stop. On this week’s podcast, in conversation with Mosaic‘s editor Jonathan Silver, he tells the whole story.

Musical selections in this podcast are drawn from the Quintet for Clarinet and Strings, op. 31a, composed by Paul Ben-Haim and performed by the ARC Ensemble.


Excerpt (9:03-10:30): 


I started to do my own due diligence, and this was a around the time when I was writing Conspiracy U, so this was very interesting because I’d been studying BDS with respect to campuses, and I really wondered to a certain degree why there was such focus on BDS resolutions on campuses. Maybe students just wanted to condemn Israel, but why specifically did they want to talk about investing? So all of this perked my interest, and using my connections—my day job is that I’m chairman of Signature Bank of New York—and talking to other people I was able to review some of these confidential Morningstar Sustainalytics reports, which I did on a confidential basis from people who had access to them in the investment community.

[Reading them], I started noticing that these reports were referencing all sorts of unusual things for an investment report. They were referencing BDS resolutions on campus. In other words, [companies that do business in the West Bank and the Golan Heights] would get marked down; you’d have a negative on your ESG rating if the Brown University student body would pass a non-binding [anti-Israel, pro-BDS] resolution. Let me just tell you, that was nowhere in any other company I saw. You could pass all the resolutions you want about every other country—it didn’t find its way into those reports.

More about: BDS, ESG, Israel & Zionism, Morningstar, Politics & Current Affairs