Arizona Treasurer Kimberly Yee has notified Morningstar Inc. that they have 30 days to prove they are not violating Arizona law in actively boycotting the State of Israel, or they will be placed on the Arizona Treasury’s prohibited investment list.
Arizona law prohibits a public entity or public fund from entering a contract or directly invest moneys with a person or company that is engaged in boycotting Israel. The Arizona Treasurer’s Office determined that Morningstar’s environmental, social, and corporate governance (ESG) focused subsidiary, Sustainalytics, uses anti-Semitic and anti-Israel sources to negatively impact the scores of companies conducting business in Israel.
“As Treasurer, it is my duty to ensure that Arizona does not do business with companies that are attempting to undermine Israel’s economy and violate Arizona’s anti-BDS law,” said Arizona Treasurer Kimberly Yee. “Morningstar’s ESG rating subsidiary, Sustainalytics, appears to violate Arizona law by negatively impacting ratings of companies doing business in Israel. I continue to strongly oppose the use of woke ESG ratings in order to keep politics out of Arizonan’s livelihoods and retirement accounts.”
In Treasurer Yee’s letter to Kunal Kapoor, CEO of Morningstar Inc., she informed Kapoor that the company had 30 days within receipt of her letter sent on August 18, 2022, to provide written certification explaining how Morningstar’s usage of ESG ratings does not violate Arizona’s anti-BDS law.
Yee also required Morningstar to provide a written averment that they will not engage in any future boycott activities against Israel.
“As Arizona’s Chief Banking and Investment Officer, I stand with Israel, and I will not allow taxpayer dollars to become victim to the woke political gamesmanship of ESG ratings. ESG ratings are a political scorecard, not a financial scorecard,” said Arizona Treasurer Kimberly Yee. “I will not allow companies to promote policies that are anti-semitic and discriminatory efforts against Israel, which is America’s longtime friend and ally, and a significant trade partner with Arizona.”
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During the last legislative session, Rep. Jake Hoffman introduced a bill, HB2656, that would have prohibited banks from using the discriminatory ESG criteria, through which corporations and progressives screen customers and companies much like China’s social credit system.
Hoffman’s bill died after Rep. Joel John refused to support it. Republicans responded during the recent Republican Primary by choosing John’s challengers. He lost in a landslide. Although John received nearly $200,000 in outside support, he was soundly beaten by newcomer Michael Carbone by 11%.