Israel cited in Caterpillar’s delisting from influential investment index

By Ron Kampeas

Jewish Telegraphic Agency

WASHINGTON (JTA) – The sale of Caterpillar tractors to Israel was a factor, but not the determining one, in the delisting of the company from an influential index that prioritizes good governance and human rights.The move, however, is poised to further complicate the difficult ongoing conversation about Israel taking place between American Jewish groups and the Presbyterian Church (USA).

A senior official at MSCI-ESG, a subdivision of MSCI, an investment advice firm, said Caterpillar already had a low rating before its delisting earlier this year, in part because of its association with the Israeli army’s use of the tractors in the West Bank and past use in the Gaza Strip. The role of Israel’s use of the tractors in the decision also suggests that a sustained campaign by pro-Palestinian groups has had some effect, although officials at MSCI-ESG and one of its clients, the TIAA-CREF pension fund, deny succumbing to direct pressure.

TIAA-CREF’s divestiture amounted to $72 million in funds, dwarfing previous divestitures by liberal religious groups such as Friends Fiduciary, a Quaker group that divested $900,000.

The news of the delisting comes ahead of the biennial general assembly of the Presbyterian Church (USA), where divestment from Caterpillar and other companies selling products used by the Israeli army will be considered.

Ethan Felson, the vice president of the Jewish Council for Public Affairs, and the Jewish community’s lead official in countering the boycott, divestment and sanctions movement aimed at Israel—known as BDS—said that how the movement was spinning the news of the MSCI-ESG decision would cause “damage” just ahead of the Presbyterian colloquy.

BDS groups already were claiming a victory, although Felson noted that the sales to Israel were neither the immediate nor the preeminent factor in the divestment. He said that linking Caterpillar to Israeli practices was “nonsensical,” noting that it had no say in how the U.S. military resells the tractors and that it could not legally turn down the U.S. military as a client.

The MSCI-ESG official told JTA on Friday that what drove Caterpillar off the index was the company’s decision in February to shutter a Canadian plant following a high-profile dispute with employees. However, the official acknowledged that several factors played into the company’s already relatively low rating, including the association of Caterpillar with Israeli army practices in the administered territories.

The death in 2003 of Rachel Corrie, an American pro-Palestinian activist, while she was protesting the demolition of a Palestinian home in the Gaza Strip helped spur the BDS movement. Corrie’s parents and witnesses say she was caught beneath an armored tractor. The Israeli army denies fault and maintains that she was killed by debris.

MSCI-ESG—ESG stands for Environment, Social or Governance—has as its clients a number of progressive groups that base their investments in part on social justice issues, including care for the environment, the treatment and safety of employees, and involvement in human rights abuses.

Its decision, made in February and effective as of March 1, came to light this week because of claims by groups associated with the BDS movement that a decision by TIAA-CREF—a pension fund for teachers and other academics—to divest from Caterpillar was a result of their pressure.