In order to make money while advertising their own moral superiority, many investment firms make a point of seeking to put their clients’ money in concerns that received good marks in “environmental, social, and corporate-governance” (ESG) terms. This means, in practice, that financial-services companies like Morningstar issue ESG ratings—based on the political flavors of the day—that then shape the decisions of investors. Morningstar’s ESG arm has come under fire, and also found itself running afoul of the laws of various states, for considering doing business with Israeli Jews a sign of social irresponsibility. Richard Goldberg comments:
Morningstar [recently] reaffirmed negative ratings for seven Israeli firms due to their operations in Jerusalem, Judea, and Samaria, or their support for Israeli counterterrorism operations. Now it’s up to governors, attorneys general, and treasurers to rid this company of Israel boycotts once and for all.
Spain-based Construcciónes y Auxiliar de Ferrocarriles (CAF) is, [for instance] subject to a human-rights-controversy rating because it builds and operates trams in Jerusalem, the capital of Israel. . . . Morningstar said CAF, like Bezeq and B Communications, [to which it gave similar bad ratings], was contributing to the maintenance and expansion of “settlements”—suggesting it is company policy to consider eastern Jerusalem, including the Western Wall, to be an Israeli “settlement” rather than Israel’s capital. Morningstar’s spokesperson also compared CAF helping Israel to expand light-rail access for Israeli-Arabs in Jerusalem to involvement in “rail projects that support Myanmar’s junta as it uses trains to move its troops, arms, and other supplies.”
In all these cases, Morningstar makes no allegation that these companies are involved in any violation of human rights. Instead, the alleged violation is merely providing non-controversial services or infrastructure in specific territory controlled by Israel. . . . This could trigger divestment and contracting bans in certain U.S. states, whose laws consider differential treatment of companies operating in Israeli-controlled territory to be a form of boycott.