Corporate governance advisor ISS buys South Pole’s climate data arm

Max Horster to join ISS as combination presented as a “turn-key solution” for investors

Corporate governance research firm Institutional Shareholder Services (ISS), the leading proxy advisory firm, has acquired the investment climate data advisory division of South Pole Group, the Switzerland-based sustainability consulting firm.

It’s the latest in a string of acquisitions that Maryland-based ISS, owned since 2014 by private equity firm Vestar Capital Partners, has made in the broader ESG space over the past few years.

It bought Sweden’s Ethix SRI Advisors in September 2015 and BlackRock-backed governance start-up iiWisdom in August 2016. In January this year it bought IW Financial, a US firm offering ESG research, consulting, and portfolio management solutions. ISS talks of a “growing suite” of responsible investment products and a “turn-key solution” for institutional investors.

The deal, the terms of which weren’t released, comes as climate disclosure is reaching a new level of importance for investors and corporates amid developments like the Task Force on Climate-related Financial Disclosure (TCFD) and shareholder support for climate disclosure resolutions at companies like Exxon Mobil. Just yesterday, Exxon and others launched the Climate Leadership Council, calling for a “gradually rising and revenue-neutral carbon tax”. 

The transaction also comes amid a shifting market in ISS’s home market as the Financial CHOICE Act could – potentially – change the corporate governance landscape.

The South Pole arm is not the first environmental data provider to be snapped up recently. Last year S&P Dow Jones Indices acquired Trucost while campaign group ShareAction is absorbing the Asset Owners Disclosure Project.Established in 2010 and based in Zurich, South Pole’s investment climate data advisory division will be re-branded “ISS-Ethix Climate Change Advisory”.

The founder of the business, Max Horster, will join ISS as a Managing Director. Horster is the founder of Climate Neutral Investments, which is owned by South Pole; he heads up all of the firm’s financial industry initiatives.

Division to be re-branded as ISS-Ethix Climate Change Advisory

ISS said the South Pole unit has the world’s largest database of company-level climate change data and screens more than $2trn of assets under management. It has worked for investors like Sweden’s AP6, for whom it conducted an analysis of the climate impact of private equity investments.

“This acquisition underscores our continued commitment to assist investment professionals through a rapidly growing suite of responsible investment (RI) solutions,” said Marija Kramer, Head of Responsible Investment at ISS.

“Climate change is among the top issues for investors globally and we are pleased to integrate their deep expertise, data, analytics, and advisory with our existing services covering RI policy development, screening, engagement and more.”

Horster said the combination of ISS-Ethix’s “deep expertise in responsible investment research and our data, research, and advisory, institutional investors will have a true turn-key solution on which they can rely for their investment- decision making”.