Morningstar has announced it plans to “align” Sustainalytics with its index business under the leadership of Morningstar Indexes president Ron Bundy, while Sustainalytics president Bob Mann is to depart from the firm altogether.
Bundy, who joined Morningstar in 2019, told Responsible Investor that the two businesses had been working together on a number of initiatives, and that there were natural areas where closer alignment would benefit both the ESG market and the firm’s clients.
Sustainalytics has a host of services and analytics available to the investment community, while Morningstar Indexes looks to create ESG versions of every index it calculates, Bundy said. “It’s important that we have one voice to clients when we talk about ESG and ESG indexes,” he added.
The firm will be looking at what areas of the two businesses to more closely align over the next 90 days, but Bundy said that they would remain distinct businesses “with really tight alignment in a lot of key areas”. The move would create a “one stop shopping experience for ESG needs” and allow a broader array of ESG services to develop.
While Mann is leaving Sustainalytics, Bundy was keen to emphasise that this was a question of expansion rather than streamlining of the businesses. Morningstar said in a statement that Sustainalytics and its index business had delivered 30.5 percent and 35.5 percent growth in revenue in 2022, respectively.
Mann, who is also chief operating officer, became president of the firm in 2015. Before his executive roles, he was director of indexes and also helped establish its sustainability services team. He joined in 2007 as an analyst.
Bundy spent 15 years at FTSE Russell, including as CEO of Russell Indexes, and CEO and president of Russell Investments Japan.
A spokesperson for Morningstar said that Mann will remain as a consultant till the end of June to help with the transition and integration plans. The spokesperson said that Mann’s departure was his own decision and that he would be missed from the firm.
Morningstar acquired a 40 percent stake in Sustainalytics in 2017 and bought out the remaining shares in 2020 for a lump sum of €55 million; and undisclosed additional payments in a deal which valued the firm at €170 million.
Sustainalytics was no stranger to acquisitions itself, having previously bought out a number of service providers. Its founder and CEO Michael Jantzi left in 2022 after being appointed to the ISSB.
Bundy denied any link between the announcement and upcoming regulation of ESG ratings providers by the EU.