How ESG Became a Tool for Genocide-Washing
Rating agencies remove references to human rights violations in occupied Palestine
The West’s complicity over what is increasingly being described as Israel’s genocidal war in Gaza continues to deepen.
That same complicity extends to the world of financial ratings. Agencies like Morningstar Sustainalytics and MSCI are tasked with evaluating companies and investment funds on how they manage environmental, social, and governance (ESG) risks. In theory, this is meant to happen fairly and without political interference.
But that’s not how things work in practice. An investigation I recently worked on—alongside colleagues across Europe and led by the Dutch publication Follow the Money—reveals that both Morningstar and MSCI have made changes to their ESG reports concerning human rights violations in the occupied Palestinian territories.
MSCI’s quiet reversal
MSCI made these changes quietly. Take the case of the American equipment manufacturer Caterpillar. For over two decades, the company’s D9 bulldozer—used by the Israeli Defence Forces (IDF)—has been flagged by human rights groups and the United Nations for its role in demolishing homes, farms, orchards, and even causing civilian deaths.
The D9 gained international attention in 2003 when it crushed American peace activist Rachel Corrie to death as she protested house demolitions in Gaza.
In 2012, MSCI itself removed Caterpillar from its indices, citing the company’s involvement in these very activities. Its ESG reports continued to reflect that history, assigning Caterpillar adverse human rights ratings for years.
As recently as August 2023, MSCI gave the company a score of 3 out of 10 for human rights concerns, noting that Caterpillar was “embroiled in controversies” over its supply of demolition equipment “used by Israel Defense Forces implicated in alleged human rights violations.”
The report cited long-standing allegations by NGOs that Caterpillar bulldozers had been “weaponised” to destroy homes, crops, and civilian buildings in the West Bank and Gaza. It also referenced the death of Rachel Corrie.
Fast-forward to August 2024, and MSCI’s report tells a completely different story. All references to Gaza, the West Bank, or any human rights issues in the occupied Palestinian territories (while those in China remain) have vanished. Caterpillar now receives a perfect 10 out of 10 on human rights.
This, despite the fact that human rights violations in Gaza and the West Bank have only intensified between August 2023 and August 2024.
There are even specific reports linking Caterpillar’s D9 bulldozer to recent atrocities. In April this year, The New York Times reported that Israeli soldiers shot and killed at least 15 medics in Gaza. After the killings, a Caterpillar D9 was used to crush ambulances and a fire truck, pushing them into a pit alongside the bodies.
In December 2023, Caterpillar bulldozers were reportedly used to flatten tents outside a hospital in Gaza, killing and injuring an “unconfirmed” number of people, according to the United Nations.
MSCI has denied making any changes to methodology.
Morningstar bows to pressure
Morningstar, on the other hand, has been fairly transparent about what it has changed. In December 2024, it announced that it would entirely exclude the “Israeli-Palestinian conflict area” from consideration in its human rights research.
The company argued that “human rights issues, when related to contiguous territorial disputes, are less likely to be objective, reliable, or consistent, and subject to complex geopolitical factors, divergent views, and conflicting partisan media reports”.
These changes followed intense lobbying by several pro-Israel Jewish organisations, including JLens, the Jewish Federations of North America, and the Anti-Defamation League. The details of their campaign are outlined in considerable detail on JLens’s website.
In July 2022, the coalition sent a letter to Morningstar Sustainalytics’s leadership demanding the company “root out anti-Israel bias” in its ESG research. It argued that the methodology used unfairly singled out Israel for scrutiny, penalised companies for business activity in disputed territories, and relied on what they described as biased sources, such as the UN Human Rights Council and NGOs.
Soon after, in October 2022, Morningstar began to make changes. Terms like “occupied Palestinian territory” were replaced with geographical names such as “West Bank” and “East Jerusalem”, and references to the BDS [boycott, divestment and sanctions] campaign and certain UN sources were removed from its ESG research.
Then in May 2023, JLens helped organise a series of workshops for Morningstar staff on “antisemitism and anti-Israel bias.”
By July, the number of companies flagged as controversial by Morningstar Sustainalytics for operating in Israel and the West Bank had dropped from 109 to 26, according to JLens.
In the months that followed, Morningstar made a series of changes—culminating in a December 2024 decision to exclude the entire “Israeli-Palestinian conflict area” from its human rights assessments. References to the BDS movement, the UN Human Rights Council, and NGOs like Who Profits were quietly removed.
Does ESG even mean anything?
When I asked the economist Jayati Ghosh what concerned her most about the changes MSCI and Morningstar had made, she said it was the fact that she wasn’t surprised. “That,” she told me, “is what’s most disturbing.”
She explained that she had long been sceptical of ESG, viewing it more as a vehicle for greenwashing—or SDG-washing—than a serious framework for accountability or change.
“Even the sham is better than no pretence,” she said. “Now, there’s not even that. The whitewashing—or obliteration—of the genocide is almost as bad as the actual genocide.”
It also reinforces a deeper truth: that the West is only willing to go so far when it comes to “responsible investing.” It’s easy to wax eloquent about the virtues of ethical finance or talk up green portfolios, but far harder to build a system that is actually credible.
There is now piles and piles of evidence that shows that primarily “ESG” is a vehicle for greenwashing or whitewashing or, in this case, genocide-washing.
It has also become a tool for the West to project its values onto others selectively. For example, MSCI’s latest report on Caterpillar, omits any mention of the company’s alleged human rights violations in Palestine, yet includes extensive detail on its links to forced labour in China, particularly concerning the Uyghur population.
Human rights violations in China matter—because the West opposes China. Israel’s genocidal war on Palestine is encouraged—because the West is aligned with Israel. Putin’s invasion of Ukraine is to be fought against—because the West is not aligned with Putin, well, at least not yet.
That hypocrisy is laid bare in this now-famous BBC clip.
Of course, the West does not hold a monopoly on hypocrisy. There’s plenty of it elsewhere—perhaps even more. But what makes the Western version so galling is the moral preaching that accompanies it. The insistence on universal values, selectively applied. The sermons on justice, delivered with one hand, while the other signs off on impunity.
We’re told to invest responsibly. Maybe one day, someone will define what that actually means.
