CalSTRS backs latest US corporate governance merger

The $118.88bn (€89.6bn) California State Teachers’ Retirement System, CalSTRS, has publicly backed the merger announced by the Corporate Library, GovernanceMetrics International and Audit Integrity.

The move sees Audit Integrity – which evaluates corporate accounting – team up with research houses The Corporate Library and GovernanceMetrics, who had previously announced that they would merge in July. The new merged entity will operate under the GovernanceMetrics International name and have more than 100 employees. Audit Integrity CEO Jack Zwingli will be the new firm’s CEO while Corporate Library CEO Richard Bennett will be Executive Chairman.

“These three companies have been pioneers in providing important and meaningful governance research,” said Anne Sheehan, CalSTRS’ Director of Corporate Governance, in a statement. “As a client of all three firms, we look forward to the next generation of services the newly combined organization will now be able to provide.”
The trio have the stated aim of becoming the “clearleader for corporate governance services”. The deal is the latest development in the consolidation of the governance sector as smaller players seek scale as big league names like MSCI and Bloomberg have entered the industry.
Bennett had indicated that the earlier merger was just the “first step in growth” in an interview with Responsible-Investor.com.

The new firm has offices in New York City, Portland, Maine, and Southern California and more than 300 clients including pension funds, regulators, insurers and auditors. They will introduce a single integrated platform – with a single governance rating to be “forthcoming”. The combined firm’s board comprises Bennett and Zwingli, governance pioneers Neil Minow and Robert Monks. Other members include: entrepreneur James Kaplan; The Corporate Library co-founder Ric Marshall; GMI co-founders Howard Sherman and Gavin Anderson; and risk analytics expert Laurie Adami. Both GMI and the Corporate Library are listed as signatories to the UN Principles for Responsible Investment.