Since 2019 Moody’s, Standard &Poor, and the Dow Jones, have been pouring billions of dollars into the climate risk space as ESG investment becomes mainstream. In 2022 we will see a consolidation of this trend and the creation of robust climate data platforms to better structure ESG investments.

The recent acquisition frenzy around ESG is good and bad. It is good because the market finally believes there are climate and societal risks that need to be priced-in to assets, and it is bad because as market speculates on anything ESG (particularly skewed towards climate issues and net-zero trends), there will be more greenwashing as well as inflationary pressures. This is particularly true if the transition to ESG and the prioritized decarbonization efforts happen too rapidly without adequate policies.

This acquisition trend is driven by investors and companies demanding more reliable data-based analytics to support their investment and strategy decisions as they pertain to ESG, Impact Investment and Green Finance. As ESG consolidates itself throughout 2022, we will have more M&A activity around climate risk intelligence. This will help to fill the much-needed geospatial analysis, climate risk, vulnerability, and exposure assessment gap. The big firms leading these efforts aim to become the climate risk service providers of choice, as there will be a huge increase in climate risk data demand.

Market signals

Here are a few striking examples of this M&Atrend. In August of last year, Moody's paid more than $2 billion to purchase one of the leading risk modeling firms, RMS. This is a global risk engineering firm with yearly revenues of about $300 million. Through this acquisition, Moody will be able to integrate cross-sectoral risk assessment and risk avoidance strategies for its clients in the insurance industry. Another key acquisition that shows this market trend, is the January 2022 S&P Global acquisition of the Climate Service, a North Carolina-based climate risk modeling firm. With this acquisition, as well as with the launch of its ESG focused fund in 2021, S&P Global becomes more competitive particularly with younger generation climate-friendly clients. The S&P Global can now offer its clients a comprehensive number of services such as risk data, benchmarking, and scoring to better integrate natural and technological risk (such as climate disasters, digital inequality, and cybersecurity shocks)in their investment decisions. As I write this article, another Wall Street institution, the Dow Jones launched its Sustainability Data Platform to streamline its ESG Investing processes. As reported by Yahoo Finance, through this data platform, the Dow Jones will be able to provide daily risk analysis and climate scoring on more than 6,000 publicly traded companies. This will guide financial firms to make better ESG investment decisions based on more dynamic, accurate and transparent sustainable data sources. In the banking sector, large US and Canadian banks such as Wells Fargo, Bank of America and Royal Bank of Canada have established a consortium to better measure climate risk, as they want to become the climate-conscious banks of the future.

Trend going forward

Andrea Zanon, an international ESG advisor who has advised International Financial Institutions and over 20 countries and Minister of Finance develop ESG, Resiliency and Sustainability Strategies, comments:

Financial markets have played catch up over the last two years to overcome the uncertainty around climate and natural disaster risk. These recent acquisitions coupled with US and EU policy actions are providing strong incentives to other capital markets institutions to follow their suit and become more active across the climate-focused ESG movement. This is also confirmed by the unprecedented participation of banks, investment funds and Fortune 500 companies to the COP26 Climate Summit that took place in the UK in Nov 2021. For the first time ever, the world’s big banks, insurance companies, and financial regulators are working together and are committed to incorporating carbon emissions into strategies and decisions to enable a more orderly transition to a “zero net carbon economy”.These M&A deals show that markets believe there is huge money to be made from selling data that analyzes changing climate risk and trends. Expect more in 2022 as the ESG bubble grows.


Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended content


Recommended Content

Editors’ Picks

Bitcoin, Ethereum and XRP defend key support on sixth day of Israel-Iran war, what to expect

Bitcoin, Ethereum and XRP defend key support on sixth day of Israel-Iran war, what to expect

Bitcoin (BTC), Ethereum (ETH), and XRP are holding steady above key support levels. The top three cryptocurrencies have weathered the geopolitical tension and macroeconomic events of the past week. 

Top Meme Coins Price Prediction: Dogecoin, Shiba Inu, Pepe set to extend losses

Top Meme Coins Price Prediction: Dogecoin, Shiba Inu, Pepe set to extend losses

Top meme coins extend recent losses on Wednesday, with the segment’s market capitalization standing at $54.41 billion, a decline of over 20% in the past month. Dogecoin (DOGE) and Shiba Inu (SHIB) are down 3% so far this week.

Crypto Today: Bitcoin, Ethereum, XRP weather geopolitical tensions, risk-off sentiment ahead of Fed rate decision 

Crypto Today: Bitcoin, Ethereum, XRP weather geopolitical tensions, risk-off sentiment ahead of Fed rate decision 

The cryptocurrency market is broadly consolidating amid ongoing geopolitical tensions in the Middle East. Bitcoin (BTC) mirrors the lethargic sentiment, trading at around $104,572 at the time of writing on Wednesday.

Stellar and ApeCoin Price Prediction: XLM and APE at risk of further losses as technical weakness grows

Stellar and ApeCoin Price Prediction: XLM and APE at risk of further losses as technical weakness grows

Stellar price closes below its critical support at $0.2537, hinting at a correction ahead. ApeCoin touches the lower boundary of an ascending triangle formation, a breakdown would signal a downtrend.

Bitcoin: BTC could slump to $100K amid Trump-Musk tussle

Bitcoin: BTC could slump to $100K amid Trump-Musk tussle

Bitcoin (BTC) tumbled to a low of $101,095 on Friday amid volatility in the market. The effect of the tussle between United States (US) President Donald Trump and Tesla Chief Elon Musk negatively influenced the NASDAQ and Tesla's stock price on Thursday, although both are recovering on Friday.

The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

BTC

ETH

XRP