In a bold, industry-wide game-changer, RiskMetrics announced said that it is buying New-York based Innovest, a global leader in environmental, social and governance (ESG) research, for $16 million in cash.
The move is a gamble that shareowner appetite for ESG analysis will grow, especially after staff cuts in these areas by the likes of Citi, Deutsche Bank,and JPMorgan, Global Proxy Watch reports. The acquisition is commercial evidence of the rapid fusion of mainstream corporate governance with environmental and social responsibility. Savvy corporate executives may read it as a signal to get ESG profiles in shape or face critical RMG scrutiny.
Due to close March 2, the buy will double RiskMetrics¹s ESG staff to more than 80. CEO Ethan Berman wants to equip RMG with data and screening tools that make it a dominant player in the socially responsible investment industry. John Connolly, former president and CEO of Institutional Shareholder Services (ISS), was named chairman of the board of Innovest. During his ISS tenure, revenues doubled profits increased 250% over three years. This phenomenal growth ultimately led to the sale of ISS in early 2006 to RiskMetrics Group for $556 million.