New York – Thomson Reuters has acquired the business of ASSET4 AG, a Swiss-based provider of Environmental, Social Responsibility and Governance (ESG) information and tools in the continuing consolidation of ESG research providers. The terms of the acquisition were not disclosed.
ASSET4 Background
ASSET4 was founded in 2003 by Peter Ohnemus, a Swiss entrepreneur and venture capitalist, and Henrik Steffensen, a former partner at Ohnemus’s private equity firm. The acquisition by Thomson vindicates the firm’s strategy of aggressively building a large ESG dataset as the core product. ASSET4 collects 900 data items, such as pollution, water use and violations of corporate governance, and 250 performance metrics on some 3,000 companies. All data is publicly available — the company does not use analysts to make assessments or judgments on companies. Data is delivered through excel spreadsheets.
To fund the expense of building the database and employing large numbers of databankers, ASSET4 went through a series of capital raises including minority investments from Goldman Sachs and Merrill Lynch.
ASSET4 uses Thomson Reuters as a data source for the financial data it collects, which should facilitate integration. According to Clark, “The plan is to rapidly integrate it [ASSET4] into our core financial products.” The firm employs 180 people, and its major clients include Bank Sarasin, Storebrand and Société Générale.
Shakeout in the ESG Space
ASSET4’s acquisition follows Riskmetric’s purchase of Innovest and KLD, and the merger of Jantzi Research and Sustainalytics. Swiss based sustainability rating agencies Centre Info and INrate also announced their merger planned for the first quarter of 2010.
Bloomberg’s announcement in August that it is building an ESG product doubtless provided added motivation to both parties. According to Abel Clark, global head of strategy and marketing, investment and advisory at Thomson Reuters, the firm had been looking at the ESG space for some years.
Thomson’s entry into the ESG space, along with Bloomberg and Riskmetrics, marks a major shift in the role of ESG analysis from a socially responsible backwater to more mainstream financial analysis. U.S. investors in particular have historically been skeptical of ESG research, concerned that ESG analysis did not generate good performance.
However, a recent study by Quantitative Services Group (QSG) of ASSET4 data suggests that there is a link between ESG data and alpha generation. According to a Thomson Reuters statement, “Of the $55 trillion global equities market, approximately $5 trillion are screened for a variety of ESG issues already. This figure is expected to increase as mandated and voluntary disclosure is set to increase.”
The purchase of ASSET4 adds pressure on remaining unaffiliated ESG providers. Perhaps Trucost will be the next to get hitched?