Moody’s and MSCI Announce a Strategic Partnership to Enhance Transparency and Deliver Data-Driven Risk Solutions

Rhea-AI Summary

Moody's (NYSE:MCO) and MSCI Inc. (NYSE:MSCI) have announced a strategic partnership to enhance transparency and provide data-driven risk solutions focusing on ESG and sustainability. The partnership will see Moody's utilizing MSCI's industry-leading ESG ratings and sustainability data, while MSCI gains access to Moody's Orbis database, the world's largest source of firmographic information. This collaboration aims to leverage the strengths of both companies, offering enhanced ESG content and risk assessment solutions to their customers across banking, insurance, and corporate sectors. Financial details of the agreement were not disclosed.

Positive

• Moody's will leverage MSCI’s industry-leading ESG ratings and sustainability data.
• MSCI gains access to Moody's Orbis database, extending its private company ESG coverage.
• The partnership aims to provide better ESG transparency and data-driven risk solutions.
• Moody's customers will benefit from MSCI’s renowned ESG content.
• MSCI will enhance its solutions across client segments and asset classes through this agreement.

Negative

• None.

Insights

Financial Analyst

The strategic partnership between Moody’s and MSCI signifies an important move towards integrating ESG data with firmographic and credit data. This collaboration is likely to enhance the analytical capabilities of both companies, providing more comprehensive risk assessment tools to a broad range of clients, particularly in the banking, insurance and corporate sectors. Combining Moody’s robust credit data with MSCI’s ESG ratings could lead to more precise evaluations of investment risks and opportunities, especially those related to sustainability.

This partnership could be particularly beneficial for investors focused on ESG criteria, as it offers a more granular view of private company data. It also allows for improved transparency in the private credit market, a sector that has been increasingly under the spotlight. The downside, however, could be the potential overlap in services, which may lead to complexities in integration. Nevertheless, in the long-term, this synergy is expected to deliver enhanced risk solutions that align with the growing demand for sustainable investments.

Market Research Analyst

The integration of Moody’s Orbis database with MSCI’s private company ESG coverage provides a significant advancement in data-driven decision-making processes. For stakeholders, this partnership means better and more reliable data to base their decisions on, enhancing overall market transparency. As ESG considerations become more critical in investment decisions, the combined expertise of Moody’s and MSCI can provide more nuanced insights into how companies manage ESG risks and opportunities.

While the financial terms of the deal were not disclosed, it is clear that the strategic benefits outweigh the immediate financial disclosures. The move to enhance private company coverage can cater to the increasing interest in private equity and debt markets, offering investors more robust tools for evaluating these assets. Short-term benefits include improved data access for Moody’s and MSCI’s existing customers, while long-term advantages revolve around setting new standards in ESG risk assessment.

ESG Specialist

This partnership emphasizes the growing importance of ESG metrics in the financial sector. By leveraging MSCI’s industry-leading ESG ratings, Moody’s can provide its clients with more detailed and relevant sustainability data. This is particularly useful in a market increasingly driven by ESG considerations. The collaboration also showcases a forward-thinking approach, as it aims to address the data gaps in private company ESG coverage.

For retail investors, this could translate into more informed investment decisions and better alignment with personal values concerning sustainability. However, it's important to observe how both companies implement this integration and communicate it to their customer base to ensure clarity and efficiency. The long-term impact will depend on how these enhanced data solutions influence investor behavior and market trends in ESG investing.

NEW YORK--(BUSINESS WIRE)-- MSCI Inc. (NYSE:MSCI) and Moody’s Corporation (NYSE:MCO) today announced a groundbreaking strategic partnership agreement, leveraging each other’s strengths to bring greater transparency on ESG and sustainability to markets and power better decisions.

(Graphic: Business Wire)

Moody’s will leverage MSCI’s sustainability data and models, which are used by the world’s largest asset managers and asset owners. The agreement, entered into last week, includes MSCI’s industry-leading ESG ratings and content, which measure a company’s management of financially relevant ESG risks and opportunities. With access to MSCI data, Moody’s intends over time to migrate its existing ESG data and scores to offering MSCI’s sustainability content through a range of solutions serving Moody’s customers in the banking, insurance and corporate sectors.

MSCI will gain access to Moody’s Orbis database, the world’s leading source of firmographic information with data on more than 500 million entities, to extend its private company ESG coverage. In addition, MSCI and Moody’s will explore solutions that leverage Moody’s private company data and credit scoring models to provide greater insight into the private credit market.

“Moody’s is excited to partner with MSCI, a leader in solutions for the global investment community and a pioneer in ESG and sustainability,” said Rob Fauber, President and CEO of Moody’s. “This is a real win-win, as Moody’s customers gain access to MSCI’s renowned ESG content and MSCI customers will gain access to Moody’s world-class risk assessment expertise, data and insights.”

“We are exceptionally pleased to partner with Moody’s to offer MSCI’s ESG and sustainability data to Moody’s broad base of global customers,” said Henry A. Fernandez, Chairman and CEO of MSCI. “Sustainability remains one of the most important trends reshaping the global investment landscape, and the shift to private assets is another. This agreement will help MSCI expand our private company ESG coverage and deliver enhanced solutions across client segments and asset classes.”

The partnership does not impact Moody’s Ratings, the credit rating agency, which will continue to provide transparency into the material impacts of ESG factors on its credit ratings through its proprietary Credit Impact Scores and Issuer Profile Scores. Moody’s Ratings will also continue to offer its sustainable finance offerings, including Second Party Opinions and Net Zero Assessments. In addition, Moody’s remains committed to providing its market-leading climate solutions to customers.

The financial terms of the deal were not disclosed.

About Moody’s Corporation

In a world shaped by increasingly interconnected risks, Moody’s (NYSE: MCO) data, insights, and innovative technologies help customers develop a holistic view of their world and unlock opportunities. With a rich history of experience in global markets and a diverse workforce of approximately 15,000 across more than 40 countries, Moody’s gives customers the comprehensive perspective needed to act with confidence and thrive. Learn more at moodys.com.

About MSCI

MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 50 years of expertise in research, data, and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios. We create industry-leading research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process. To learn more, please visit www.msci.com.

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995

Certain statements contained in this document are forward-looking statements and are based on future expectations, plans and prospects for Moody’s business and operations that involve a number of risks and uncertainties. Such statements involve estimates, projections, goals, forecasts, assumptions and uncertainties that could cause actual results or outcomes to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements. Stockholders and investors are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements and other information in this document are made as of the date hereof, and Moody’s undertakes no obligation (nor does it intend) to publicly supplement, update or revise such statements on a going-forward basis, whether as a result of subsequent developments, changed expectations or otherwise, except as required by applicable law or regulation. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Moody’s is identifying certain factors that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking statements. These factors, risks and uncertainties include, but are not limited to: the impact of general economic conditions (including significant government debt and deficit levels, and inflation and related monetary policy actions by governments in response to inflation) on worldwide credit markets and on economic activity, including on the volume of mergers and acquisitions, and their effects on the volume of debt and other securities issued in domestic and/or global capital markets; the uncertain effectiveness and possible collateral consequences of U.S. and foreign government initiatives and monetary policy to respond to the current economic climate, including instability of financial institutions, credit quality concerns, and other potential impacts of volatility in financial and credit markets; the global impacts of the Russia - Ukraine military conflict and the military conflict in Israel and the surrounding areas on volatility in world financial markets, on general economic conditions and GDP in the U.S. and worldwide, on global relations and on the Company's own operations and personnel; other matters that could affect the volume of debt and other securities issued in domestic and/or global capital markets, including regulation, increased utilization of technologies that have the potential to intensify competition and accelerate disruption and disintermediation in the financial services industry, as well as the number of issuances of securities without ratings or securities which are rated or evaluated by non-traditional parties; the level of merger and acquisition activity in the U.S. and abroad; the uncertain effectiveness and possible collateral consequences of U.S. and foreign government actions affecting credit markets, international trade and economic policy, including those related to tariffs, tax agreements and trade barriers; the impact of MIS’s withdrawal of its credit ratings on countries or entities within countries and of Moody’s no longer conducting commercial operations in countries where political instability warrants such actions; concerns in the marketplace affecting our credibility or otherwise affecting market perceptions of the integrity or utility of independent credit agency ratings; the introduction or development of competing and/or emerging technologies and products; pricing pressure from competitors and/or customers; the level of success of new product development and global expansion; the impact of regulation as an NRSRO, the potential for new U.S., state and local legislation and regulations; the potential for increased competition and regulation in the jurisdictions in which we operate, including the EU; exposure to litigation related to our rating opinions, as well as any other litigation, government and regulatory proceedings, investigations and inquiries to which Moody’s may be subject from time to time; provisions in U.S. legislation modifying the pleading standards and EU regulations modifying the liability standards applicable to credit rating agencies in a manner adverse to credit rating agencies; provisions of EU regulations imposing additional procedural and substantive requirements on the pricing of services and the expansion of supervisory remit to include non-EU ratings used for regulatory purposes; uncertainty regarding the future relationship between the U.S. and China; the possible loss of key employees and the impact of the global labor environment; failures or malfunctions of our operations and infrastructure; any vulnerabilities to cyber threats or other cybersecurity concerns; the timing and effectiveness of our restructuring programs, such as the 2022 - 2023 Geolocation Restructuring Program; currency and foreign exchange volatility; the outcome of any review by tax authorities of Moody’s global tax planning initiatives; exposure to potential criminal sanctions or civil remedies if Moody’s fails to comply with foreign and U.S. laws and regulations that are applicable in the jurisdictions in which Moody’s operates, including data protection and privacy laws, sanctions laws, anti-corruption laws, and local laws prohibiting corrupt payments to government officials; the impact of mergers, acquisitions, such as our acquisition of RMS, or other business combinations and the ability of Moody’s to successfully integrate acquired businesses; the level of future cash flows; the levels of capital investments; and a decline in the demand for credit risk management tools by financial institutions. These factors, risks and uncertainties as well as other risks and uncertainties that could cause Moody’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements are described in greater detail under “Risk Factors” in Part I, Item 1A of Moody’s annual report on Form 10-K for the year ended December 31, 2023, and in other filings made by the Company from time to time with the SEC or in materials incorporated herein or therein. Stockholders and investors are cautioned that the occurrence of any of these factors, risks and uncertainties may cause the Company’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements, which could have a material and adverse effect on the Company’s business, results of operations and financial condition. New factors may emerge from time to time, and it is not possible for the Company to predict new factors, nor can the Company assess the potential effect of any new factors on it. Forward-looking and other statements in this document may also address our corporate responsibility progress, plans, and goals (including sustainability and environmental matters), and the inclusion of such statements is not an indication that these contents are necessarily material to investors or required to be disclosed in the Company’s filings with the Securities and Exchange Commission. In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties and other factors that may cause MSCI's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond MSCI’s control and that could materially affect actual results, levels of activity, performance or achievements.

Other factors that could materially affect MSCI's actual results, levels of activity, performance or achievements can be found in MSCI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) on February 9, 2024 and in quarterly reports on Form 10-Q and current reports on Form 8-K filed or furnished with the SEC. If any of these risks or uncertainties materialize, or if MSCI’s underlying assumptions prove to be incorrect, actual results may vary significantly from what MSCI projected. Any forward-looking statement in this press release reflects MSCI’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to MSCI’s operations, results of operations, growth strategy and liquidity. MSCI assumes no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240701003299/en/

For Moody’s Investor Relations:

Shivani Kak

Moody’s Corporation

+1 212-553-0298

Shivani.Kak@moodys.com

For Moody’s Communications:

Michael Adler

Moody’s Corporation

+1 347-225-7472

Michael.Adler@moodys.com

For MSCI Investor Relations:

Jeremy Ulan

MSCI

+1 646 778 4184

jeremy.ulan@msci.com

Jisoo Suh

MSCI

+1 212 804 1598

jisoo.suh@msci.com

For MSCI Communications:

pr@msci.com

Julie Mansmann

MSCI

+1 917 815 6375

Calum MacDougall

MSCI

+44 (0) 7876 836 759

Source: Moody’s Corporation Investor Relations

Source: Moody’s Corporation Investor Relations

FAQ

What is the strategic partnership between Moody's and MSCI about?

The strategic partnership between Moody's and MSCI focuses on enhancing transparency and delivering data-driven risk solutions, particularly in ESG and sustainability.

How will Moody's benefit from the partnership with MSCI?

Moody's will leverage MSCI’s industry-leading ESG ratings and sustainability data to enhance its offerings and provide better ESG transparency and data-driven risk solutions to its customers.

What benefits will MSCI obtain from partnering with Moody's?

MSCI will gain access to Moody's Orbis database, the world's largest source of firmographic information, extending its private company ESG coverage.

Does the partnership between Moody's and MSCI affect Moody's credit ratings?

No, the partnership does not impact Moody’s Ratings. Moody’s will continue to provide transparency on ESG factors through its Credit Impact Scores and Issuer Profile Scores.

What sectors will benefit from the Moody's and MSCI partnership?

The partnership will benefit customers in the banking, insurance, and corporate sectors by offering enhanced ESG content and risk assessment solutions.