The London Stock Exchange Group (LSEG) has taken a significant step in the building out its ESG data business and the ranking of government bonds on sustainability criteria with the acquisition of Beyond Ratings, the boutique, Paris-based ESG sovereign ratings agency. The terms of the deal are not being announced, although LSEG has acquired the whole business.
It said the acquisition was part of further investment in its Information Services business, which includes FTSE Russell, its global benchmark business that already runs corporate and sovereign debt indices.
Beyond ratings has 22 staff in its Paris office and LSEG said all would be retained under the deal, with Beyond Ratings co-founders, Rodolphe Bocquet (CEO) and Sylvain Château (COO), staying in post.
In March this year, Beyond Ratings was accredited to issue ratings for central, regional, and local governments as well as (both supranational and national) policy-driven financial institutions by the European Securities and Markets Authority (ESMA).
It recently launched a tool that will measure the alignment of government bond portfolios with climate targets such as the Paris climate agreement. There is increasing pressure on credit ratings agencies to incorporate climate change considerations more thoroughly and explicitly in their assessments, particularly in Europe, where the European Commission is working with ESMA on the topic.
In July last year, Beyond Ratings took on board Grizzly RI, the Paris-based ESG research entity set up in 2015 by Valery Lucas-Leclin, who formerly jointly ran Bank of America Merrill Lynch’s (BoAML) sustainability research in London.LSEG said the Beyond Ratings business will report in to Reza Ghassemieh, Managing Director – Head of Research & Analytics at FTSE Russell in London.
Bocquet and Château set up Beyond Ratings in 2014. It specialises in analysing the default risk of sovereign issuers globally, with an enhanced focus on risks from energy and climate policies. Bocquet, a former trader and risk manager on equity derivatives for Société Générale, developed in the environmental finance and sustainable development field via managing positions for several French public entities (ADEME, Conseil régional d’Aquitaine, Agence Française de Développement). Château previously developed Enerdata, a leading international provider of energy data and modeling for over 180 countries, for 10 years, as the CEO and major shareholder.
Waqas Samad, Group Director of Information Services at LSEG, said: “The acquisition of Beyond Ratings will accelerate LSEG’s ability to deliver research-driven, multi-asset solutions in sustainable finance investing to our global client base.”
LSEG’s sustainable finance business focuses on two key areas: green financing for issuers (both debt and equity); and information services, including ESG indices and analytics.
For more on this topic…
ESG in sovereign bond portfolios will be discussed in a dedicated panel at next week’s RI Europe. For the full agenda, see here