The 47-member United Nations Human Rights Council has released a blacklist of more than 100 companies that it accuses of raising "particular human rights concerns" due to their location in Jewish communities in Judea and Samaria.
They have also more broadly questioned the legitimacy of the Human Rights Council.
The UN list included a vast array of prominent Israeli companies in major sectors - from food to transport and communications - that work both in the occupied West Bank but also represent a large part of the country's economy.
Democratic Senator Ben Cardin and Republican Senator Rob Portman, who sit on the Finance Committee and Foreign Relations Committee, called it an "anti-Israel database, akin to a blacklist, of companies" that made major USA companies, including General Mills and Airbnb vulnerable to boycotts.
Citing the belief that "the inclusion of Israeli companies in the UN Human Rights Council's blacklist might expose those companies to legal procedures, prompting global corporations to pull out of their investments in Israel".
"The Office of the high commissioner for human rights has lost touch with reality", he said in a statement. "However, after an extensive and meticulous review process we are satisfied this fact-based report reflects the serious consideration that has been given to this unprecedented and highly complex mandate", Michelle Bachelet said in a statement.
Palestinian Foreign Minister Riyad Al-Maliki welcomed the report as a "victory for worldwide law" and urged United Nations member states to issue instructions to the companies listed "to end their work immediately with the settlement system". It comes months after the USA announced that it no longer considers West Bank settlements to be illegal and weeks after President Donald Trump unveiled his peace plan which allows for Israeli sovereignty over those communities.
Israel captured the West Bank from Jordanian forces in 1967 and continues to control and occupy the area, while Palestinians living there have limited self-rule over small enclaves.
The country's prime minister, Benjamin Netanyahu, speaking to a local radio station, said he would "fight this with all our strength".
Multiple efforts were made by the U.S.to halt the list's publication, which took four years to compile.
This warm US embrace could cause trouble for Israel.
The Palestinians have rejected Trump's plan, and other countries have expressed little support for it while remaining opposed to the settlements.
"The long awaited release of the United Nations settlement business database should put all companies on notice: to do business with illegal settlements is to aid in the commission of war crimes", said Bruno Stagno, HRW's deputy executive director for advocacy. The report said its authors had communicated directly with the companies to allow them to defend themselves or say whether they had changed their practices.
Human Rights Watch, a vocal critic of the settlements, applauded the report.
But Israel's allies accused the council of collaborating with the BDS movement - a grassroots Palestinian-led coalition that advocates boycotts, divestment and sanctions against Israel.
According to a press release, the OHCHR found "112 business entities which the UN Human Rights Office, on the basis of the information it has gathered, has reasonable grounds to conclude have been involved in one or more of the specific activities referenced in Human Rights Council resolution 31/36 ["Israeli settlements in the Occupied Palestinian Territory, including East Jerusalem, and in the occupied Syrian Golan"]".
Keaten reported from Geneva.