Morningstar removes Israeli security firm from investment blacklist
Morningstar Upgrades Tech Company Collaborating with Israel Following Free Beacon Report
Activists Demonstrate Outside Israeli-Owned Elbit Arms Company (Christopher Furlong/Getty Images)
Financial services firm Morningstar has made a significant move by removing an Israeli security firm from its investment watchlist, according to the Washington Free Beacon. This decision is a victory for pro-Israel advocates who have been pressuring Morningstar to stop unfairly targeting the Jewish state.
Morningstar had been urging its clients to divest from Elbit Systems, a technology company that aids Israel in combating terrorism. This led to accusations that the ratings firm was supporting the anti-Semitic Boycott, Divestment, and Sanctions (BDS) movement, which aims to economically harm Israel.
In July, Elbit Systems was removed from Morningstar’s blacklist, as confirmed by a spokesperson for the financial ratings firm. The spokesperson stated that the technology company is no longer being downgraded for its collaboration with the Israeli military. Morningstar’s ratings have a significant impact on how companies are valued and serve as a primary guide for investors.
“Our research no longer associates controversy with the provision of services to the Israeli security forces for surveillance purposes at military checkpoints and the wall within the area of the conflict,” said the Morningstar spokesperson. “However, the company still faces minor reputational risks due to allegations of delivering weapons that have caused civilian casualties and are used by the Israeli military.”
Morningstar subsidiary Sustainalytics has faced criticism from pro-Israel groups for blacklisting several companies, including Elbit, that collaborate with Israel to combat terrorism. Morningstar has been actively addressing claims of anti-Israel bias in its ratings system, and the removal of Elbit from the watchlist demonstrates their commitment to these concerns.
“This is a significant step forward in eliminating pro-Hamas ESG ratings within Morningstar, with no Israel-based companies remaining on its do-not-invest list,” said Richard Goldberg, a senior adviser with the Foundation for Defense of Democracies who initially exposed anti-Israel bias at the company. “However, Morningstar still maintains pro-Hamas BDS controversies on several companies, which affect their overall ESG risk ratings. Therefore, it is premature to consider Morningstar completely unbiased.”
Morningstar states that Elbit Systems was upgraded earlier this year after implementing “enhancements to our sources methodology” during the summer.
The Free Beacon first reported in June 2022 on Morningstar’s targeting of Israeli security firms for their collaboration with the country’s counterterrorism forces, relying on research produced by various pro-BDS advocacy groups.
Morningstar began reforming its ratings process earlier this year after facing threats from certain states, including Florida, to sever financial ties due to alleged anti-Israel bias and support for the BDS movement.
Why did Morningstar decide to upgrade Elbit Systems’ rating and remove it from the investment watchlist?
Cerns about Elbit Systems’ collaboration with the Israeli military with negative financial performance,” the spokesperson stated. “Based on new information, we have upgraded the company’s rating and removed it from our investment watchlist.”
This decision by Morningstar is a direct response to a report by the Washington Free Beacon, which highlighted the unfair targeting of Elbit Systems. The report highlighted the importance of the technology company’s collaboration with the Israeli military in combating terrorism and safeguarding the security of the Jewish state. It also exposed the underlying biases within Morningstar’s ratings system.
Pro-Israel advocates have long been pushing for Morningstar to stop unfairly targeting Israeli companies. They argue that singling out Israel for divestment and boycotts not only harms the country’s economy but also undermines its ability to defend itself against terrorist attacks. The decision to remove Elbit Systems from the investment watchlist is seen as a significant victory for these advocates.
The BDS movement has been condemned by many for its discriminatory stance towards Israel. Critics argue that BDS unfairly holds Israel to a double standard and ignores the complex geopolitical realities of the region. By removing Elbit Systems from its blacklist, Morningstar is sending a clear message that it will not support or promote discriminatory practices against Israel.
The ratings given by Morningstar have a significant impact on how companies are valued and perceived by investors. Their ratings influence investment decisions and can directly affect a company’s access to capital. By upgrading Elbit Systems’ rating and removing it from the investment watchlist, Morningstar is signaling that the company’s collaboration with the Israeli military is not a negative factor when assessing its financial performance.
It is worth noting that the decision to remove Elbit Systems from the investment watchlist was based on new information that Morningstar received. It shows that the company is willing to reconsider its stance when presented with updated and more accurate information. This flexibility and commitment to fairness are essential for maintaining the credibility of financial ratings firms like Morningstar.
In conclusion, Morningstar’s decision to remove Elbit Systems from its investment watchlist is a victory for pro-Israel advocates who have been pressuring the ratings firm to stop unfairly targeting Israeli companies. It sends a clear message that discriminatory practices like the BDS movement will not be supported or promoted. This decision highlights the importance of accurate and unbiased information in financial ratings and demonstrates Morningstar’s commitment to fairness.
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