Stakeholders wary of market consolidation as Moody's closes ESG ratings business
Responsible Investor 03/07/2024
"The provider is popular among users seeking a double materiality approach to sustainability analysis.
Moody's impending exit from the ESG ratings space could accelerate consolidation within the ESG ratings sector, put upward pressure on prices, and leave a gap in the market, according to users.
The credit ratings and data provider has confirmed to Responsible Investor that it will "discontinue its standalone ESG scoring products and will close its ESG Solutions business" after announcing a strategic partnership with MSCI this week.
Under the terms of the agreement, Moody's will begin offering MSCI data and ratings to clients. In return, MSCI will gain access to Moody's Orbis database, which will allow the data provider to extend its coverage of private companies.
Moody's declined to comment on reports of mass redundancy across its ESG Solutions unit.
The ratings agency acquired Paris-based Vigeo Eiris in 2019 in a deal understood to be worth around €50 million. It later rebranched the company as Moody's ESG Solutions.
The closure will not affect Moody's climate data products and second-party opinion services.(...)
(...) Frédéric Ducoulombier, founding director at EDHEC-Risk Climate Impact Institute, noted that historically the Vigeo Eiris offering "was aligned to 'socially responsible investing' and has therefore always focused on what is known today as double materiality".
"This is sad for a company that has made a distinctive contribution to values-based investing", he added.
Ducoulombier had been a user of Moody's data while serving as a director at index provider Scientific Beta.
He noted that Moody's had been more "receptive to feedback on data and models and were focused on improving their quality" compared to other providers.
"However, the bigger issue now is that there are very few providers remaining that are not linked to index provision and other value-added activities. Anti-competitive practices are rife in the business and supervision of competition authorities is ineffective." (...)"
Copyright Responsible Investor
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Stakeholders wary of market consolidation as Moody's closes ESG ratings business
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Operating from campuses in Lille, Nice, Paris, London and Singapore, EDHEC is one of the world’s top 15 business schools. Fully international and directly connected to the business world, EDHEC commands a strong reputation for research excellence and the ability to train entrepreneurs and managers capable of breaking new ground. EDHEC functions as a genuine laboratory of ideas and produces innovative solutions valued by businesses. The School’s teaching is inspired by its research work and a focus on “learning by doing”, all with the aim of equipping people with the skills to succeed in business.
