Sustainalytics buys ESG Analytics reinforcing commitment to leveraging product innovation

The acquisition of ESG Analytics AG, a Zurich-based provider of web-based solutions that assists asset managers and owners to analyse and manage environmental, social and governance (ESG) risk, by Sustainalytics, a provider of ESG and corporate governance research, ratings and analysis, has been characterised as further proof of the Dutch firm’s commitment to new product development and “leveraging technology” to boost value for clients.

ESG Analytics, founded in 2012, is known for its cloud-based software that utilises a comprehensive proprietary methodology to evaluate ESG metrics.

Sven Lidén, ceo of Adveq, a leading asset manager that invests in private equity globally that manages over US$6bn in assets, commenting said: “We helped to launch ESG Analytics three years ago because we wanted to further quantify the progress and impact of our investment activities with regard to ESG aspects.” Other industry participants have “expressed interest in adopting the same approach,” he added.

As well as serving conventional investment managers and pension funds, ESG Analytics has built a reputation in the private equity space, collecting and analysing ESG data on portfolio and target companies and helping managers with reporting to general and limited partners.

Michael Jantzi, ceo of Sustainalytics, reflecting on the deal said: “Sustainalytics is committed to innovation through new products and leveraging technology to enhance the value we provide to clients across a spectrum of risk identification and mitigation solutions.”
He also claimed that the transaction, which was expected to close at the end of September 2015, “enhances Sustainalytics’ position as an ESG market leader” and would help them “accelerate” many of their product innovation initiatives.

ESG Analytics’ products have consistently received high marks for their strong data visualisation and intuitive workflows as well as reliable user experience. Besides an office in Zurich, the firm has representation on Wall Street in New York.

“As the market leader in providing ESG research solutions to institutional investors, Sustainalytics is an ideal fit for us,” stated Rina Kupferschmid-Rojas, ESG Analytics’ ceo and founder. The hope now is that Sustainalytics can leverage ESG Analytics’ “global footprint and resources to extend the reach of our innovative risk analytics solutions” according to Kupferschmid-Rojas.

On the analytics solutions front, Primus, a complimentary data management tool designed to measure the ESG performance of portfolio companies, was released to the market by the Swiss firm back in late May.

Essentially geared towards the private equity sector, it includes a set of 20 core ESG metrics, which were specifically selected for their ability to be “leveraged for cost savings, risk management, and value creation” across diverse industries.

Primus’ interface is touted as being able to guide fund managers as they take the “strategic first steps” in understanding and managing ESG risks and opportunities - without significant resource or time commitments.

The company claimed that Primus will help to “kick-start ESG integration” by providing investors a simplified way to apply meaningful ESG metrics to investments across a range of sectors.

Kupferschmid-Rojas added: “While the focus on ESG integration continues to grow within the private equity space, we are aware of the need for additional instruction and support for investors looking to begin the process.”

In a separate development, Morningstar Inc. announced plans this August to launch the industry’s first ESG scores for global mutual and exchange traded funds (ETFs) later this year. The company, which provides data on over 500,000 investment offerings, will base these scores on Sustainalytics’ ESG ratings.

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