South Carolina’s state treasurer is threatening to cut ties with Morningstar, a billion-dollar financial firm, for its relationship with a subsidiary that was found to be negatively rated companies connected to Israel.
In a letter to Morningstar CEO Kunal Kapoor, South Carolina State Treasurer Curtis M. Loftis Jr. alleged that Sustainalytics, a wholly-owned subsidiary of Morningstar, negatively rates firms connected to Israel. Those ratings were issued in the context of the subsidiary’s effort to rate the environmental social and governance practices (ESG), a standard that some believe reflect far left-leaning positions.
“The State of South Carolina does not support companies that are involved in the boycott, divestment, or sanctions of Israel, and the recent reports regarding Sustainalytics are concerning,” Loftis wrote.
The South Carolina Treasury office currently relies on Morningstar for its ratings, data and analysis of the state’s Future Scholar 529 College Savings Plans, a $6 billion fund. Loftis wrote that Morningstar must provide “proof” the firm complies with South Carolina law, which prohibits blacklisting “a person or firm based on race, color, religion, gender, or national origin of the targeted person or entity.”
Absent proof of complianceSouth Carolina will end its relationship with Morningstar.
“The state constitution and code of make it clear that my responsibility is to the citizens of South Carolina, not to politically and financially motivated laws special interests,” Loftis said. “Elected officials from many states and both parties feel the same way, and it is time we begin a national conversation about resisting the powerful influences arrayed against the interests of our citizens.”
Sustanalytics identifies itself as a “global leader in ESG research and data,” and serves 18 out of the 20 largest asset managers.
“For more than 30 years, our firm has focused on delivering innovative solutions that have enabled the world’s leading institutional investors to identify, understand, and manage ESG-driven risks and opportunities,” the company’s “About Us” page reads. “With Sustainalytics now apart of Morningstar, we’re accelerating our efforts to bring meaningful ESG insights to investors of all types across different asset classes at the company and fund level.”
ESG is an ambiguous scoring system that rates corporations based on considerations that have little to do with the bottom line, including companies’ environmental, social, and governance policies.
Loftis and 17 other state treasurers previously wrote in an Aug. 25 letter to Morningstar that an independent review of their ESG practices revealed a “deeply infused” anti-Israel bias and asked the company to take corrective action. In an interview with Fox News Digital, Loftis said Morningstar’s answers thus far have been insufficient, prompting today’s letter. He says he hopes the firm “takes the time to address this seriously.”
“Morningstar is violating a principle that South Carolina has, which that we won’t support companies that don’t support freedom and democracy. The BDS movement is anti-freedom, anti-democracy,” Loftis said.
A Morningstar spokesperson told Fox Digital: “Morningstar does not support the anti-Israel BDS campaign.”
Fox News’ Houston Keene contributed to this report.