Sustainalytics opens new US office and hires ex KLD head as research competition hots up

Move comes just one week after Boston-based KLD sells out to RiskMetrics.

Sustainalytics, the ESG research group, is opening a new US business in Boston and has hired Darragh Gallant, former head of client services and marketing at KLD, as its new director of US operations. Sustainalytics’ expansion into the US comes almost immediately after the sale of Boston-base research group KLD to RiskMetrics, the New-York listed group, in a $10m deal announced last week. It suggests that Sustainalytics sees an opportunity to challenge RiskMetrics, the biggest global ESG research provider, for business in the US. Gallant decided to move to Sustainalytics rather than join the combined RiskMetrics/KLD group, although the majority of senior staff from KLD is understood to be moving over to the merged firm.
Gallant told Responsible-Investor.com that her priorities for the new Sustainalytics Boston office would be to hire a couple of research analysts with expertise in covering US companies, as well as staff for sales support and client services.
Sustainalytics, an Amsterdam-based consortium of European ESG research houses backed by PGGM, the Dutch pension fund, Triodos Bank and Fortis MeesPierson, merged with Canada’s Jantzi Research in September this year. The new Boston office will be branded as Jantzi Sustainalytics, its US marketing label. That deal came just ten months after Sustainalytics wascreated through the merger of the former entities of Dutch Sustainability Research (DSR), Scoris (Germany) and Analistas Internacionales en Sostenibilidad – AIS (Spain). Talking to Responsible-Investor.com, Michael Jantzi, chief executive office of Sustainalytics said the company had the goal of being a global ESG research provider with a local presence: “The US is one of the most robust SRI markets but still has some way to go in terms of broadening its reach to an increasingly interested mainstream. The recent consolidation of research providers, is, I think, part of this move to making ESG research of ‘investment grade’ quality on a global basis.”
As a result, Jantzi says he believes it could become more difficult for the regional ESG players to compete. But, he said he also predicted the emergence of specialist niche players on themes and sectors such as the environment, human or labour rights.
One outstanding issue that needs clearing up, however, is Jantzi’s index relationships with KLD, notably on the environmental side.
Similar index deals signed between KLD and FTSE in the UK are also still to be resolved, although FTSE executives met with RiskMetrics executives last week to begin that discussion. Janzti said: “KLD is no more, so we are talking with RiskMetrics, but I think that the issue will be resolved soon.”