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The
review is two-pronged, covering ESG matters as well as whether
the financial research firm violated a separate Missouri law
aimed at protecting Israel from a campaign to isolate the Jewish
state over its treatment of Palestinians.
Staff for Schmitt said it is the first instance of a state
looking into ESG ratings products potentially breaching such
laws, on the books in more than 30 U.S. states.
The investigation by Schmitt - a Republican who on Tuesday won
his party's nomination for a U.S. Senate seat [L1N2ZE2KQ] -
comes as political allies in various states ramp up pressure
against efforts to address climate change and tackle other
social and environmental issues.
"Missouri has been a leader in pushing back against woke ESG
investing, and my office will continue to look out for
consumers," Schmitt said in a statement.
Morningstar Chief Executive Kunal Kapoor said the company was
evaluating Schmitt's action.
"Sustainability introduces new choices for investors;
Morningstar provides the data and insights to help investors of
all types weigh those choices in their decision making," Kapoor
said in a statement.
In a pair of July 26 civil investigative demands to Morningstar
and to its Sustainalytics ESG-ratings unit, Schmitt said they
may have violated the Missouri Merchandising Practices Act such
as by misrepresenting or omitting facts.
Schmitt's office said the violations may have occurred through
the sale of ESG products to Missouri-based businesses and other
consumers, such as if the products overly emphasized the risk
for companies of doing business in Israel.
Among his demands, Schmitt is seeking documents or
communications relating to "ESG Services and BDS," referring to
efforts to boycott, divest or sanction the Jewish state or
companies there.
Morningstar has said it does not support the BDS campaign - a
claim for which Schmitt also sought documents.
The investigation covers some old ground for Chicago-based
Morningstar. The firm in June said it would cancel a human
rights research product meant to help clients evaluate companies
working in high-risk countries and disputed territories.
A law firm hired by Morningstar found the research focused
disproportionately on the Israeli-Palestinian conflict relative
to other regions, though it found fewer problems with other
products.
(Reporting by Ross Kerber in Boston; Editing by Lincoln Feast.)
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