The list was mandated by a 2016 Florida law that was revised earlier this year to add a requirement of divestment of direct holdings in any company on the list. Previously, SBA was prohibited from adding to any existing positions.
According to the revised law, Morningstar will now have 90 days following its placement on the list to cease what the SBA defines as a boycott of the country. If “the company continues to boycott Israel, the public fund must sell, redeem, divest, or withdraw all publicly traded securities of the company from the public fund within 12 months after the company’s most recent appearance on the Scrutinized Companies that Boycott Israel List,” according to the law’s text.
Trustee meeting materials did not provide any further information on the reason for inclusion on the list, except for a reference to Morningstar’s ESG research subsidiary Sustainalytics.
As of June 30, the Florida Retirement System held 26,343 shares of Morningstar stock with a total value of $5.9 million.
In a statement, a Morningstar spokesperson said, “Morningstar does not support the anti-Israel BDS campaign; it never has, and it never will.”
“Following questions about whether some of Sustainalytics’ ESG research reflected biases, we engaged with organizations to understand the concerns and underwent a thorough, independent review of our research on the sensitive area of human rights. That process, while long, was a substantive and productive one that has made our research stronger and more consistent for the investors we serve,” the spokesperson said. “We completed all of the enhancements to our research earlier this year, pending review by independent, external experts. Among the changes we’ve implemented, we have enhanced our approach to using sources, clarified the human rights guidance that underpins aspects of our research, unified oversight of our methodologies and improved the language we use.”
“Morningstar does not take the trust investors place in our data, research and analytics lightly. We look forward to continuing to provide investors with the information they seek to guide successful investing outcomes,” said the spokesperson.
The Florida State Board of Administration oversees $241.4 billion in assets including the $188.8 billion Florida Retirement System.