This month, a subsidiary of global index and research provider MSCI agreed to acquire Zurich-based environmental fintech and data analytics firm, Carbon Delta. The move will strengthen MSCI’s climate risk capability, taking advantage of Carbon Delta’s modelling technology for climate scenario analysis, forward-looking assessment of transition and physical risks, and its analysis of publicly traded global companies. This will inform a new climate risk metric, which calculates the impact of climate change on a company’s market value, and helps investors understand, quantify and reduce the exposure to these climate risks within their portfolios. It will also incorporate the impact of compliance with rapidly developing climate risk disclosures, such as the Task Force on Climate-related Financial Disclosures (TCFD) and the United Nations Principles for Responsible Investing (UNPRI).
Speaking about the acquisition, Remy Briand, Head of ESG at MSCI, said, “We believe climate change will become one of the most important investment factors over the long term.” In buying Carbon Delta, the company is certainly putting its money where its mouth is. And with good reason: MSCI has outperformed the market in 2019, owing largely to a 25% increase in subscription revenue from its environmental, social and governance (ESG) data and demand from its indices, which include more than 1,000 ESG-themed products.
MSCI is not the only one to be capitalising on ESG’s rise in popularity among investors. Both Moody’s and S&P have also attempted to expand their ESG offer this year. MSCI’s purchase of Carbon Delta should be seen as just the latest move in an increasingly competitive ESG market.