Morningstar drops investment service at library after landing on Florida's anti-Israel list

TALLAHASSEE — Retiree MaryAnn Kaesberg went to her library in Seminole County recently to research stocks and mutual funds like she usually does, only to find the popular Morningstar Sustainalytics research website was blocked.

A librarian told her it was because the state had added Morningstar to a list of companies prohibited from doing business with Florida because of policies that boycott Israel or list companies doing business in the West Bank as high-risk.

“Morningstar cannot continue its service with our library as they have been placed on Florida’s ‘Scrutinized Companies that boycott Israel’ list by the state of Florida,” library officials told Kaesberg in an email.

Library officials confirmed to the Orlando Sentinel that Morningstar told them it made the decision to cancel the district’s $10,400 a year subscription when it was up for renewal in January because of the decision to place it on the “scrutinized companies” list.

“I have never heard of this list. We cannot imagine why the publication is being scrutinized. Are they censoring adults as well as children in Florida?” Kaesberg told the Sentinel. “I am not sure if their other products are causing them to be scrutinized. This is an expensive publication, which has been offered for years by the library. I miss having access to it.”

Morningstar said its services had been cut off in Florida.

“It is true that we could not renew contracts for Morningstar Sustainalytics clients that are Florida government entities,” said company spokeswoman Sarah Wirth.

She wouldn’t say how many other library districts, universities, colleges or other state agencies have had their subscriptions canceled but said the company “would look to resume services to affected clients” once it is removed from the list.

A check of Orange, Alachua and Leon counties this week showed they still provided the service.

On Tuesday, Florida officials took a step toward taking the company off the list, after receiving a report that Morningstar had changed its policies based on recommendations from experts in Israeli-Palestinian affairs.

Specifically, Florida officials said they would reinstate Morningstar Analytics if it follows through on recommendations to remove “occupied territories” from its criteria for determining the investment risks in certain companies operating in the West Bank.

Gov. Ron DeSantis, Attorney General Ashley Moody and CFO Jimmy Patronis voted unanimously to lift the ban if the company provides documents proving it made the changes to adhere to Florida’s anti-boycott, divestiture and sanctions law. They made that call in their role as the State Board of Administration.

DeSantis touted the decision as a victory for Florida’s policy.

“I think their actions are promising,” DeSantis said.

Once they are removed from the list, however, they will continue to be monitored, he said.

The vote to ban Morningstar was the first such divestment after DeSantis signed a bill into law last May that cracked down on companies perceived to use environmental, social and governance standards to target Israeli companies.

This isn’t the first time the state has gone after companies that didn’t do business in the West Bank.

DeSantis and the SBA placed AirBnB on its watchlist in 2019 because it wouldn’t list properties in the West Bank. The company reversed its policy, and the state rescinded the sanction.

And three years ago the SBA sold Florida’s shares in Unilever, the parent company of Ben & Jerry’s ice cream, which had been placed on the scrutinized list for refusing to sell products in the West Bank.

The state’s sanctions against Morningstar last October came a year after the company had already committed to address the anti-bias concerns raised by Jewish organizations. Morningstar said it had never boycotted Israel.

“In fact, Morningstar has long done business in Israel and has many clients in Israel,” Wirth said.

The company “engaged with organizations to understand the concerns and underwent thorough, independent reviews of our research in the sensitive area of human rights,” Wirth said. “That process, while long, was a substantive and productive one that we’re grateful to have taken. Our research today is even stronger for the investors we serve.”

In evaluating the risk to investors, Morningstar’s ratings make assumptions that Israeli-connected companies are at risk of violating international human rights standards because they operate in the West Bank, according to the Foundation for Defense of Democracies, a nonpartisan think tank.

The Jewish groups that had raised concerns about the language said they considered the matter resolved in February after Morningstar accepted the recommendations to remove what they considered language supporting the nonviolent Boycott, Divestment and Sanctions movement protesting Israel’s treatment of Palestinians.

“If the remaining BDS controversies come off Israeli companies after this, we can finally say that Morningstar is BDS free,” said Rich Goldberg of the Foundation for Defense of Democracies.