Ratings giant Moody's buys big chunk of California climate-risk data firm

Financial services company Moody’s has snapped up a majority stake in climate-risk data firm Four Twenty Seven as part of its drive to “advance global standards for assessing environmental and climate risk factors.”

The terms of the acquisition have not been disclosed, but it is seen as a major move from one of the world’s biggest credit ratings agencies that could have a significant impact on how seriously climate risk factors are viewed by financiers.

Based in California, Four Twenty Seven scores physical risks associated with climate-related factors and other environmental issues, including heat stress, water stress, extreme precipitation, hurricanes and typhoons, and sea-level rise.

Its scores and portfolio analytics have global coverage and quantify risk exposures across asset classes, with data covering over 2,000 listed companies and 196 countries to help inform bank, investor and government decision-making, according to Moody’s.

The acquisition is therefore aimed at solidifying Moody’s commitment to “promoting transparent and globally consistent standards for evaluating environmental, social and governance (ESG) risks and opportunities,” the company announced last week.

“Four Twenty Seven has built a strong platform for quantifying climate-related exposures and producing actionable risk metrics, which are essential to understanding and informing climate risk and resilience measures,” said Myriam Durand, global head of assessments at Moody’s Investors Service. “Moody’s is committed to offering global, transparent standards for assessing environmental risk, and the acquisition of Four Twenty Seven advances our objective of integrating climate analytics into our offerings.”

Nick Mabey, co-founder and CEO of climate NGO E3G, described the acquisition as a “big deal” that could have significant implications for listed firms.

This is a big deal as @427climaterisk do ground breaking analysis of financial vulnerability to climate impacts at an asset level. A lot of people are going to lose money when @MoodysCorp incorporates their work into its ratings. Time to change now before the market does. https://t.co/VeawxOUxi6

— Nick Mabey (@Mabeytweet) July 25, 2019

Four Twenty Seven will continue to operate under its existing brand at its headquarters in Berkeley, California, but will act as an affiliate of Moody’s Investors Service, Emilie Mazzacurati, founder and CEO of Four Twenty Seven, confirmed.

“Moody’s global coverage and analytical capabilities, combined with Four Twenty Seven’s comprehensive climate risk data and intelligence, provides an ideal path to continue our work helping market participants integrate potential climate impacts into risk management and investment decisions,” she said.

In related news, Schroders announced it has agreed to buy a majority stake in Swiss impact investor BlueOrchard in a bid to expand the asset management giant’s “sustainability capabilities.”

Schroders said teaming up with BlueOrchard would help it to “better serve clients who are increasingly seeking investment which have a beneficial impact on society and the environment, as well as generating positive financial market returns.”

Peter Fanconi, chairman of BlueOrchard, added the partnership would help the firm “further increase our impact and jointly contribute to the achievement of the U.N. Sustainable Development Goals.”