67 Fall 2026 from working with a company that boycotts Israel.38 In total, 37 states have such anti-boycott laws, including eight that have both anti-divestment and anti-contracting provisions. Laws requiring state contractors to certify that they do not boycott Israel have been challenged on First Amendment grounds, but have largely survived such scrutiny. Slight adjustments to the anti-contracting provisions of some antiBDS laws were required in response to such litigation, though they remain largely intact.39 (And the anti-divestment provisions were always on the firmest legal ground.) In the most comprehensive lawsuit against an anti-contracting law, the Eighth Circuit Court of Appeals, sitting en banc, upheld the Arkansas statute, finding that it only restricted non-speech commercial activity.40 The Supreme Court declined to hear an appeal of the Eighth Circuit’s ruling.41 These state laws played an instrumental role in thwarting boycott or divestment decisions by Morningstar in 2022 and Ben & Jerry’s in 2021. A subsidiary of Morningstar, which rates investment opportunities based on ESG factors, was disproportionately flagging investments in Israel for supposed investment risks.42 In response, Illinois and other states threatened to divest from Morningstar based on the states’ anti-divestment laws.43 Given the size of state pension funds, this threat put significant pressure on Morningstar and ultimately led the company to reverse its stance, making favorable commitments to avoid singling out Israel.44 Similarly, when Ben & Jerry’s decided to boycott Israel, Illinois, New Jersey, Colorado, and other states divested from their parent company, Unilever.45 Under both ERISA and corporate fiduciary duties, investment funds and companies ought to consider the possibility that state pensions could divest from them for complying with BDS. If a company decides to boycott Israel – a burden imposed on Unilever because of its subsidiary Ben and Jerry’s ultimately thwarted boycott decision – then many state pensions would be required to dump the company’s stock. That is similarly true for investment managers investing state pension money. The risk of counter-divestment is a strong disincentive for corporate boards or investment managers to boycott or divest. Moreover, attempts by BDS to make a business case for divesting from Israel have been weak. Historically, the so-called business case was rooted in Israel’s security risks. In the last three years, those security risks were manifested in the worst possible ways, with Israel having been subjected to the October 7 massacre, and both drone and missile attacks from Hezbollah, the Houthis, and Iran. But during this same period, Israel’s stock market hit an all-time high.46 38. Id. 39. Elizabeth Byrne, “Texas narrows law barring contractors from boycotting Israel” (May 9, 2019), available at https:// www.texastribune.org/2019/05/09/texas-anti-boycott-israel-law-greg-abbott-hb793/; Jerod-MacDonald-Evoy, “Ducey signs bill loosening anti-BDS law in attempt to stop litigation” (Apr. 16, 2019), available at https://azmirror.com/ briefs/ducey-signs-bill-loosening-anti-bds-law-in-attempt-to-stop-litigation/ 40. Ark. Times v. Waldrip, 37 F.4th 1386, 1394 (8th Cir. 2022) (“Although it requires contractors to agree to a contract provision they would otherwise not include, it does not require them to publicly endorse or disseminate a message. Instead, the certification targets the noncommunicative aspect of the contractors’ conduct—unexpressive commercial choices. The “speech” aspect—signing the certification—is incidental to the regulation of conduct.”). 41. Arkansas Times LP v. Waldrip, SCOTUSBLOG, available at https://www.scotusblog.com/cases/arkansas-times-lp-v-waldrip/ 42. Jacob Miller, “Facing Illinois blacklist, Morningstar commits to resolving anti-Israel biases” (June 29, 2022), available at https://jewishinsider.com/2022/06/morningstar-illinois-israel-technology/ 43. Id. 44. Id. 45. Ross Kerber, “Illinois bars state pensions from owning Unilever over Israel” (Dec. 23, 2021), available at https:// www.reuters.com/markets/europe/illinois-bars-state-pensions-owning-unilever-over-israel-2021-12-23/; Alex Burness, “Colorado pension fund plans to drop Ben and Jerry’s investment over stance on Israeli occupation” (Mar. 18, 2022), available at https://www.denverpost.com/2022/03/18/colorado-pension-fund-israeli-occupation/; Patrick McGeehan, “N.J. to Pull $182 Million Out of Unilever Over Ben & Jerry’s and Israel” (Sep. 16, 2021), available at https://www. nytimes.com/2021/09/16/nyregion/ben-and-jerrys-israel-unilever.html 46. Sharon Wrobel, “Tel Aviv shares break record highs in 2025 despite war, outpacing global markets” (Dec. 28, 2025), available at https://www.timesofisrael.com/tel-aviv-shares-break-record-highs-despite-war-outpacing-global-marketsin-2025/; Lefkovits, supra note 26.
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