For many values-focused investors, environmental, social, and governance (ESG) funds are attractive investment vehicles that aim to address environmental and social considerations while targeting long-term investment returns. The ESG market comprises a significant portion of the investment market; according to Bloomberg, global ESG assets totaled more than $30 trillion in 2022 and are projected to reach $40 trillion by 2030 or more than 25% of projected global assets under management.[1]
Jewish investors may be interested in ESG funds, as many ESG funds consider environmental and social topics that can be tied to Jewish values, such as the value of Tikkun Olam (repairing the world). Yet, many Jewish, pro-Israel investors may be unaware of the methodologies and voting practices of these funds, and how these funds could conflict with their value of supporting Israel, such as ensuring the security of Israel’s citizens through self-defense and combating the boycott, divestment, and sanctions movement (BDS).
One such area of conflict between ESG funds and pro-Israel investors is a common methodological practice in which ESG funds screen, meaning to remove, defense company stocks from a fund’s holdings. ESG funds may screen defense companies due to the ESG risks related to the defense sector, such as the harm caused by the end use of weapons, the high levels of carbon emissions tied to the defense sector, and the rising political instability across the globe.[2] Due to these ESG risks, some ESG funds exclude defense company stocks from their funds.
Jewish values regarding defense investments reflect the careful balance of several core biblical and rabbinic principles. While Judaism places supreme value on peace – “seek peace and pursue it” (Psalms 34:15) – it also recognizes the obligation to defend against existential threats through the Torah’s direct commandment “Do not stand idly by while your neighbor’s blood is shed” (Leviticus 19:16).
Defense Screening Practices of US Large-Cap ESG ETFs
JLens conducted its own analysis on the defense screening practices of the 15 largest U.S. large-cap ESG exchange-traded funds (ETFs) by assets under management, based on ETF data sourced from ETFdb.com as of February 3, 2025. These funds are referred to by JLens as “US Large-Cap ESG ETFs.” JLens found that 13 of the 15 US Large-Cap ESG ETFs had at least a partial screen on companies receiving significant revenue from the sales of military weapons.
In practice, most of the US-Large Cap ESG ETFs do not hold any defense company stocks, meaning these ETFs exclude companies such as RTX, General Dynamics, and Lockheed Martin, either due to the fund’s screening practices or for other methodological reasons. For example, as of February 12, 2025, none of the US-Large Cap ESG ETFs held Boeing, and only one fund held General Dynamics.
For pro-Israel investors, these defense screens and lack of defense company holdings may not be in line with their value of supporting Israel’s self-defense, as many of these companies supply Israel with weapons that are critical to its self-defense. For example, RTX, formally known as Raytheon, helps build and supply Israel with the Iron Dome, which according to RTX, intercepts more than 1,500 incoming targets with a 90% success rate.[3] Lockheed Martin is also an essential defense supplier to Israel[4], of which Lockheed’s F-35 aircraft was used by Israel to conduct retaliatory strikes against Iran in 2024.[5]
From a Jewish-values perspective, investing in defense companies aligns with the principle of Pikuach Nefesh (preserving life), derived from Leviticus 18:5 – “You shall keep My statutes and My laws, which a person shall do and live by them.” The Talmud interprets “and live by them” to mean the preservation of life takes precedence over other commandments.
Proxy Voting Practices of US Large-Cap ESG ETFs
Another important consideration for pro-Israel investors is how ESG funds may inadvertently support the BDS movement through proxy voting. In prior proxy seasons, proponents of the BDS movement have filed inflammatory anti-Israel shareholder proposals, ostensibly under the guise of human rights concerns, at defense companies and other companies targeted by the BDS movement for their ties to Israel.
In the 2024 season, JLens led a campaign for investors to reject anti-Israel proposals at RTX and Amazon. For RTX, JLens informed investors that Proposal 7 in RTX’s proxy statement contained language that could embolden hostility directed against Jews in the United States and beyond, including allegations that Raytheon’s arms sales to Israel are “used to maintain the system of apartheid.”[6] And for Amazon, JLens also campaigned against Proposal 6 in Amazon’s proxy statement, which sought to end the company’s involvement in Project Nimbus—a $1.2 billion cloud computing agreement with the Israeli government.[7]
JLens assessed the voting practices of the US Large-Cap ESG ETFs on these two anti-Israel proposals:
JLens found that most of the US Large-Cap ESG ETFs are ceding their vote at these companies, as many of them do not hold RTX and Amazon, either due to their screening practice or other methodological reasons. For example, at RTX, only two of the US-Large Cap ESG ETFs held RTX. While both of these ETFs voted against the anti-Israel shareholder proposal, 87% of the US-Large Cap ESG ETFs did not take a stance on the proposal, as they did not hold the company’s stocks.
And even if an ESG fund holds a company that receives an anti-Israel proposal, the fund may not vote in the best interest of pro-Israel investors. For example, of the six US-Large Cap ESG ETFs that hold Amazon, two of the ESG ETFs – Global X Conscious Companies ETF and Calvert US Large-Cap Core Responsible Index ETF – voted in support of the Amazon proposal, which we believe called on Amazon to end its cloud computing agreement with the Israeli government.
Conclusion: ESG’s Defense Screens and Proxy Voting Policies Pose a Challenge to Pro-Israel Investors
The methodologies and proxy voting policies of US Large-Cap ESG ETFs reveal a fundamental disconnect with pro-Israel investors’ values and priorities. While ESG funds aspire to advance social good, their categorical exclusion of defense companies and occasional support for anti-Israel proposals suggests a concerning blind spot regarding the legitimate security needs of democratic nations like Israel.
This misalignment becomes particularly stark when viewed through the lens of Jewish values. While the prophetic vision in Isaiah 2:4 speaks of a future time when “They shall beat their swords into plowshares,” our present reality demands maintaining robust defensive capabilities. As Hillel taught, “If I am not for myself, who will be for me? But if I am only for myself, what am I?” (Pirkei Avot 1:14). This wisdom acknowledges that while we work toward universal peace, we must also protect life in the present – a nuance that many ESG funds fail to appreciate.
Pro-Israel investors should therefore exercise heightened scrutiny when considering ESG investments. This means carefully examining whether funds hold defense company stocks, researching their proxy voting records on anti-Israel shareholder proposals, and being willing to look beyond conventional ESG offerings to investment vehicles that better align with both environmental and social goals while supporting Israel’s fundamental right to self-defense. In today’s increasingly complex geopolitical landscape, where anti-Israel sentiment often masquerades as social justice, such careful diligence is not merely prudent – it’s essential.
[1] Bloomberg, “Global ESG assets predicted to hit $40 trillion by 2030, despite challenging environment, forecasts Bloomberg Intelligence,” February 8, 2024, Accessed February 19, 2025. https://www.bloomberg.com/company/press/global-esg-assets-predicted-to-hit-40-trillion-by-2030-despite-challenging-environment-forecasts-bloomberg-intelligence/
[2] Halkjaer Pedersen, Nikolaj, ““The defence sector in focus: Common ESG risks,” Principles for Responsible Investment, September 14, 2024, Accessed February 19, 2025, https://www.unpri.org/pri-blog/the-defence-sector-in-focus-common-esg-risks/12689.article
[3] Raytheon, “Iron Dome System and SkyHunter Missile,” 2025, Accessed February 19, 2025, https://www.rtx.com/raytheon/what-we-do/integrated-air-and-missile-defense/irondome
[4] Lockheed Martin, “Lockheed Martin in Israel,” 2025, Accessed February 19, 2025, https://www.lockheedmartin.com/en-il/who-we-are.html
[5] Epstein, Jake, “The F-35 stealth fighter’s victory against Iran’s air defenses highlights its ability to wage a higher level of war,” Business Insider, December 14, 2024, Accessed February 19, 2025, “https://www.businessinsider.com/israel-strikes-iran-shows-f-35-ready-higher-level-war-2024-12
[6] JLens, “JLens and ADL Call on Wall Street to Reject BDS Proposal at RTX, Maker of Iron Dome, Amid Recent Attacks,” April 16, 2024, Accessed Februay 19, 2025, https://www.jlensnetwork.org/jlens-and-adl-call-on-wall-street-to-reject-bds-proposal-at-rtx-maker-of-iron-dome-amid-recent-attacks/
[7] JLens, “ISS Joins JLens and ADL in Recommending AGAINST Anti-Israel Shareholder Proposal at Amazon’s Annual Meeting,” May 15, 2024, Accessed Februay 19. 2025 https://www.jlensnetwork.org/iss-joins-jlens-and-adl-in-recommending-against-anti-israel-shareholder-proposal-at-amazons-annual-meeting/
This information is for educational purposes only and should not be interpreted as investment advice or an investment offering. Investors should consult with an advisor to determine the suitability of any investment option or strategy. JLens disclaims responsibility or liability for any advice given to third parties or decisions to invest in any investment or other vehicle by you or third parties based on the information. Any investment in funds involves a risk of losing money. Past performance is not indicative of future results.
