Biden admin urged to vet companies that participate in Israel boycotts

The Biden administration is under pressure from Congress to more actively police companies that participate in boycotts of Israel, according to a letter sent Wednesday to the Commerce Department and obtained by the Free Washington Beacon.

The senses. Ted Cruz (R., Texas) and Marsha Blackburn (R., Tenn.) say the administration is “not taking enough steps to ensure that corporate America is aware of the criminal, financial and reputational risks of s engage in unauthorized boycotts” of Israel and other friendly countries.

The letter comes amid growing controversy around a financial rating product known as the Environmental, Social and Corporate (ESG) Governance Framework. ESG ratings, which aim to guide investors, examine a company based on its social values ​​and tend to unfairly target Israel due to the country’s conflict with the Palestinians. Cruz and Blackburn argue that financial companies providing ESG ratings that negatively impact Israel are violating federal and state anti-boycott laws, which were put in place to isolate the Boycott, Divestment and Sanctions (BDS) movement, an effort anti-semitic. waging economic war against the Jewish state.

The senators want Commerce Secretary Gina Raimondo to “more vigorously engage these companies to educate them on risks, which range from federal laws to state bans,” according to the letter, which cites financial giant Morningstar as an example of a company that may be violating federal law. Morningstar, one of the largest US-based financial services companies, has battled accusations that it supports the BDS movement through its ESG research arm, Sustainalytics. While Morningstar has denied the charges, experts say Sustainalytics constructs its ratings using materials written by anti-Israel groups that support the BDS movement.

“Sustainalytics has picked up on and amplified attacks by boycott advocacy groups on companies doing business with Israel,” Cruz and Blackburn say in their letter. “Proponents of economic warfare against Israel have increasingly sought to use ESG criteria as pretexts to argue for the boycott.”

The Commerce Department needs to do more to warn companies like Morningstar that they may be in direct violation of federal anti-BDS laws. “We are concerned that the trust is misplaced and that the Commerce Department is not sufficiently engaging Morningstar and similar companies,” Cruz and Blackburn write. “Sustainalytics’ ratings and implied advocacy come remarkably close to black letter violations” of federal law.

The Commerce Department, they note, “is responsible for ensuring that U.S. businesses are aware of these risks and working with them to mitigate and end any exposure.”

According to Cruz and Blackburn, the entire ESG ratings industry is infected with an anti-Israel bias fueled by the BDS movement as part of its efforts to turn Israel into a pariah state and deter investors.

“Companies that rely on ESG ratings in their business decisions have minimal transparency into the details, let alone the motivations, behind how the ratings were established,” the lawmakers write. “The practice introduces exposure to U.S. anti-boycott laws throughout the chain, and specifically for companies that design and define ESG criteria in an opaque way.”

Morningstar, which bought Sustainalytics in 2020, hired an outside law firm to investigate allegations of anti-Israel bias in its products. The report, by law firm White and Case, found instances of bias in some of Sustainalytics’ products. This includes the company’s reliance “on groups committed to boycotting Israel, including Who Profits, Human Rights Watch and Amnesty International,” according to Cruz and Blackburn.

Sustainalytics was also found to rely on information produced by the Office of the United Nations High Commissioner for Human Rights, a body known for its anti-Israel advocacy. “The Government of the United States has consistently and in all administrations condemned that [Office of the High Commissioner’s] list as an anti-Semitic effort to single out and delegitimize our Israeli allies,” the lawmakers wrote.

Other materials used by Sustainalytics in its ratings products included “anti-Semitic advocacy platforms, including the Electronic Intifada website, BDSMovement.net, Iranian dailyand the Venezuelan regime-sponsored television channel Telesur.”

Morningstar says Sustainalytics no longer relies on these materials and has implemented a series of reforms to eliminate outstanding anti-Israel bias.

Cruz and Blackburn, however, argue that the White and Case report failed to adequately address the systemic anti-Israel bias embedded in ESG products like those provided by Sustainalytics.

“The law firm didn’t take the obvious next step by noting that comparing Israel to, say, the Chinese Communist Party, which carries out an ongoing genocide against Muslims and other religious minorities, is preposterous and is itself evidence of systemic bias,” the senators write. “Nor did the report make the equally obvious point that incorporating the advocacy and goals of pro-boycott organizations guarantees the production of pro-boycott bias.”

Morningstar, through a spokesperson, told the Free tag that it in no way endorses the BDS movement and undertakes efforts to ensure that none of its financial products unfairly target Israel.

About Timothy Ball

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