Moody’s takes minority stake in Chinese ESG data provider SynTao Green Finance

Move follows New York-listed giant’s acquisitions of stakes in Vigeo Eiris and Four Twenty Seven

Moody’s Corporation, the parent of ratings agency Moody’s Investors Service, is to buy a minority stake in Chinese ESG data provider SynTao Green Finance – the latest in an series of acquisitions of sustainability data providers it has made this year.

The move
follows New York-listed Moody’s acquisitions of majority stakes in Franco-British ESG research house Vigeo Eiris in April and US-based climate risk specialist Four Twenty Seven in July.

“SynTao’s China-specific data sets provide opportunities to enhance Moody’s global ESG research and data.”

Beijing-based SynTao provides China-specific ESG data and ratings, green bond verification to the Chinese market, as well as working with policy makers on ESG.

Founded in 2009, it was an early advocate of responsible investment in China and founded the China Social Investment Forum. The firm has co-launched a series of ESG indexes, including the Landsea ESG Development Index and the Shanghai-Shenzhen ESG100 Select Index.

Moody’s said that, together with SynTao, it would provide “a range of solutions of investor and issuer ESG needs, including joint research, product development and technical cooperation”.

Moody’s said the investment, details of which were not disclosed, aligned with its “ongoing global commitment to promoting transparent standards for evaluating ESG risks”, and strengthened its presence in China “with a focus on supporting long-term, sustainable growth and contributing to the healthy development of ESG markets”. Moody’s already incorporates ESG considerations into credit ratings, but told RI it planned to expand its capabilities in provision of ESG thought leadership, assessments and data.In July, technical advice from the EU’s securities markets regulator ESMA advised against mandating credit ratings agencies to include sustainability in their ratings, but the firms are stepping up on the topic, and the Principles for Responsible Investment noted earlier this year that ESG factors are becoming “more explicit” in credit rating agencies’ commentaries.

Hao Shi, Managing Director, Country Manager for Moody’s China operations, said: “Since its founding, SynTao has solidified its position in China as a local standard setter and leading domestic platform for ESG data and analytics. SynTao’s China-specific data sets provide opportunities to enhance Moody’s global ESG research and data.”

SynTao Chairman and General Manager Dr Guo Peiyuan is a renowned CSR and SRI expert, member of the stakeholder council of Global Reporting Initiative (GRI), a member of China Finance Society Green Finance Committee, and an advisor to Asian Sustainable and Responsible Investment Association (ASrIA).

The Moody’s-SynTao deal is the latest recent tie-up between a relatively small ESG research house and a larger financial player. Morningstar took a 40% stake in Sustainalytics in 2017. And Institutional Shareholder Services (ISS), the proxy advisory firm, has bolstered its ESG offering with acquisitions of Germany’s Oekom, the climate data advisory division of Swiss-based South Pole Group and Scandinavian house Ethix.

Moody’s had $4.4bn of revenue in 2018 and employs more than 13,000 people worldwide. The ratings agency said the investment in SynTao wasn’t expected to have a material impact on its 2019 financial results. The transaction is expected to close by early November 2019.