ESG Driving New Sales for ISS

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NEW YORK – RiskMetrics, the US risk and corporate governance advisory firm that is being acquired by index group MSCI for $1.55bn (€1.2bn), reported an increase in new contract sales at its Institutional Shareholder Services (ISS) proxy voting arm, driven by growth in its environmental, social, and governance (ESG) advisory services.

According to CEO Ethan Berman, “The ISS business had a strong sales quarter by achieving a $1.2 million or 36% increase in new sales compared to the first quarter of 2009 driven by strong sales in ES&G.” RiskMetrics reported that ISS Q1 2010 new “annualized contract value” sales were $4.4 million, an increase of $1.2 million compared to $3.2 million in Q1 2009. RiskMetrics’ total revenues for the quarter were down 0.4% at $77m compared with Q109. Overall, ISS revenues were down 1% to $36.8m compared with Q1, 2009. ISS’ adjusted earnings were down 6.3% at $11.4m.

According to Responsible Investor, following the RiskMetrics buy-out, MSCI’s management said ISS was “non-core” to the combined MSCI-RiskMetrics business. Uncertainties about the future of the ISS business remain, according to Mr. Berman: “The first quarter proved challenging given the uncertainty regarding the Company’s long term ownership structure, especially in the Risk business. This uncertainty led to a significant amount of our Risk sales pipeline being put on hold, and the ensuing announcement of our merger with MSCI led to a significant amount of one-time costs. Since the announcement of our deal with MSCI, we’ve seen a pickup in our Risk new sales pipeline, especially in the US. We remain excited about our Risk business going forward and expect our quarterly Risk new sales to improve for the remainder of 2010.”

The full earnings release is available here.

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