Mass lay-offs at Moody's ESG arm after data tie-up with MSCI

Redundancies were not made public, but staff were handed their notice as deal was announced.

I understand that upwards of a hundred staff at Moody’s ESG Solutions business were made redundant yesterday as the company announced a strategic tie-up with MSCI to take the latter’s ESG data for its clients, dramatically paring back its own ESG data business. 

Sources close to the company said staff were informed yesterday that they were being made redundant and described it as a “bombshell.” 

Moody’s did not formally announce the lay-offs and could not be reached for comment at the time of writing.

Estimates are that at least 100 - and potentially more - have been laid-off across the Moody’s ESG business, across sales, methodology and operations. 

The company has staff in offices in Morocco, Paris, London, Brussels, Italy and sales operations in Asia, some of which are now understood to be closing.

The Moody’s ESG entity was formerly the Vigeo-Eiris business. Moody’s bought a majority stake in Vigeo-Eiris in 2019 in a deal worth €50m. 

However, the company had been making people redundant without announcement before yesterday’s deal. Last year, and earlier this year, up to 100 people were let go from the business via a series of redundancy rounds. Many of those redudancies were made in Paris where Vigeo, the French arm of the Vigeo-Eiris joint venture, had been based.

None of the redundancies were made public by Moody’s.  

Sources close to the company say the latest deal with MSCI has come about over concerns at Moody’s that its ESG operations would be subject to the EU’s regulation introduced in April this year on transparency of ESG research firms. A major facet of the new rules is that it requires giving companies a right to review and correct data the company deems factually incorrect. 

The sources said Moody’s had already shifted its ESG division internally within its analytics operations to potentially try and sidestep any related regulatory issues. 

In addition, the current ESG backlash was also believed to be problematic for Moody’s, alongside concerns over profitability at the ESG division.

Nonetheless, the sources said Moody’s had just finished updating much of its ESG methodology and rolling it out to clients, hence the shock at the redundancies.  

In the tie-up announcement made yesterday, Moody’s says it will now use MSCI’s sustainability data and models, including its ESG ratings and content. 

Moody’s says it will gradually blend its own ESG data and company scores with those of MSCI’s in sales to its clients in banking, insurance and at corporations.

It said the tie up with MSCI would not affect the integration of ESG factors into its mainstay credit ratings business, nor its second party opinions and net zero assessments for green bonds and companies. 

Moody’s will also continue selling climate data.

As part of the deal, MSCI will access Moody’s Orbis companies database. The two companies said they will combine private company data and credit scoring models with ESG information to expand further into the corporate and private equity markets.

A handful of staff from the Moody’s ESG business are believed to be remaining with the business to work on the transition to the MSCI data.