Florida state officials are investigating the financial ratings firm Morningstar over allegations it promotes Israel boycotts, the state’s chief financial officer told the Washington Free Beacon, setting the stage for the Sunshine State to potentially cut ties with the company as part of a new law that bars doing business with any company involved in an economic boycott of the Jewish state.
Jimmy Patronis, Florida’s chief financial officer, confirmed to the Free Beacon that his office has initiated an investigation into Morningstar’s practice of downgrading companies that work with Israel, particularly its security sector. Morningstar’s blacklist generally discourages investors from funding Israel-linked companies, which critics say bolsters the anti-Semitic Boycott, Divestment, and Sanctions (BDS) movement as it seeks to economically isolate the Jewish state.
"We’ve asked the State Board of Administration to engage Morningstar to assess why the company appears to be blacklisting companies associated with Israel," Patronis said. "The Company already has a troubling history. If they’re discriminating against Israel, Florida law is clear, and we have no choice but to explore divestment actions against the firm."
Patronis’s comment comes less than a month after Florida expanded its anti-BDS law to bar the state from doing business with any company "taking adverse action, including changes to published commercial financial ratings … to inflict economic harm on Israel," as the Free Beacon reported. The law, which was signed by Republican governor and 2024 presidential candidate Ron DeSantis, was specifically designed to target companies that shun Israeli businesses under the guise of progressive Environmental, Social, and Corporate Governance (ESG) guidelines. Florida’s probe into Morningstar sets the stage for other states to follow suit and is likely to increase pressure on the company as it battles accusations its corporate ratings system unfairly maligns the Jewish state.
Richard Goldberg, a senior adviser at the Foundation for Defense of Democracies, said Florida’s newly implemented anti-BDS measures are certain to cause problems for Morningstar and its business in the state.
"The Morningstar BDS blacklist of 26 Israel-based companies clearly falls under Florida law’s definition of an Israel boycott," Goldberg said. "Having personally reviewed the controversy and watchlist reports, I have zero doubt Morningstar is engaged in economic warfare against Israel."
Morningstar subsidiary Sustainalytics has long faced criticism from pro-Israel groups for blacklisting several companies that work with Israel to stop terrorism. This includes Motorola Solutions and Elbit Systems, both of which provide surveillance technology that helps the Jewish state combat terrorism. Sustainalytics also was found to rely on research from organizations that promote the BDS movement and accuse Israel of occupying Palestinian lands.
Following a month-long campaign by pro-Israel and Jewish advocacy groups, Morningstar promised to implement a series of changes to its ratings system that were meant to eradicate anti-Israel bias. But critics say the company is still unfairly targeting the Jewish state, even after it altered many of Sustainalytics’s most controversial practices.
Florida’s updated anti-BDS bill was passed against the backdrop of the DeSantis administration’s battle with corporations over their "woke" business practices. Earlier this year, DeSantis signed legislation that bans state officials from investing public money in ESG funds and bans the sale of ESG bonds in the state. The governor also pulled $2 billion of state assets from the financial firm BlackRock in protest over the firm's ESG policies.
More than 35 states have anti-BDS laws on the books. They primarily apply to businesses that directly boycott Israel. Florida’s updated guidelines now provide a framework for other states to target corporations that target Israel through their ESG ratings.
Morningstar vehemently denies supporting the BDS movement and worked alongside pro-Israel groups to alter its ratings process, specifically on its ESG guidelines. A spokesman for the company did not respond to a request for comment.