Sustainalytics Brand Guidelines: A 1992 Toronto Research Firm, an Amsterdam Name & Morningstar

A Toronto research firm and a European name.

Sustainalytics rates companies on environmental, social and governance matters — ESG, in the trade’s shorthand — and its roots are in Canada. Its founder, Michael Jantzi, wrote in a company blog that he set up Michael Jantzi Research Associates in 1992, having come to believe that investment capital could be used to influence how companies behave. English Wikipedia describes the business as Toronto-based Jantzi Research.

Its first public product was an index. In 2000 the firm launched the Jantzi Social Index, which English Wikipedia calls the first socially screened stock index made up of Canadian companies. The research behind it was sold to institutional investors, and that remained the core of the business.

The name came from Europe. In 2009 Jantzi Research merged with Amsterdam-based Sustainalytics, a deal that, Jantzi wrote, “gave us our name”; English Wikipedia describes the partner simply as Jantzi Research’s “European counterpart.” Dutch Wikipedia puts the combined company’s head office in Amsterdam, and Jantzi led it as chief executive. In 2011, he wrote, it bought Share Dimension in Romania to expand its technology, and the firm later opened in Japan and Australia.

Ratings, indexes and second opinions.

The company’s main products are ratings of risk. Morningstar’s announcement of April 2020 described Sustainalytics as widely known for its security-level ESG Risk Ratings, which it said underpin numerous indexes and sustainable investment products, and gave its coverage as data on 40,000 companies and ratings on 20,000 companies and 172 countries. Its website today lists ESG Risk Ratings alongside Country Risk Ratings, Low Carbon Transition Ratings, controversies research and screening services.

Its research also reaches bond markets. Sustainalytics provides second-party opinions on the frameworks behind green, social and sustainability bonds; in July 2020 Private Banker International quoted Jantzi describing the firm as the world’s largest second-party opinion provider for green and sustainable bond issuances. English Wikipedia says investors voted it “Most Impressive Second Opinion Provider” in the GlobalCapital Sustainable and Responsible Capital Markets Awards of 2017 and 2018.

Its scores have been tied to loans and indexes. English Wikipedia says that ING’s 2017 sustainability improvement loan to Philips pegged the interest rate to Philips’s Sustainalytics rating; that in 2013 the firm worked with the United Nations Global Compact to launch the Global Compact 100 index; and that on 10 September 2018 the World Bank issued a sustainable development note linked to a Sustainalytics index of Global Compact signatories.

The ratings reached a wider public too. English Wikipedia says Harvard Business Review began using Sustainalytics ESG ratings in its ranking of chief executives in 2015, and that Yahoo Finance began showing its ESG scores for more than 2,000 companies in 2018. In January 2019 the firm bought GES International, after which, English Wikipedia says, it had more than 600 staff in 17 cities.

Ratings, data and documents.

Credit rating agencies and financial data firms sell judgement and information, and most of what they publish is documents. A rating action is usually announced in a short notice naming the issuer, the grade and the outlook, followed by longer research reports and the methodology documents that explain how a grade was reached. Letter scales do much of the visual work: Fitch says it introduced its AAA, AA, A, BBB scale in 1924, and French Wikipedia notes that its long-term grades are very close to those of Standard & Poor’s, with plus and minus signs for the notches in between.

Regulation shapes that paperwork. In the United States, agencies can be registered with the Securities and Exchange Commission as Nationally Recognized Statistical Rating Organizations, the status that lets their ratings be used for regulatory purposes; in the European Union, the European Securities and Markets Authority supervises credit rating agencies and publishes its enforcement decisions as public notices. Disclosures, criteria and codes of conduct therefore sit beside the marketing pages on these firms’ websites.

Data products carry the brands to a wider audience. Agencies and research houses deliver ratings, research and data through subscription platforms and data feeds, and some lend their names to index families and fund ratings: Morningstar said in 2020 that it had worked with Sustainalytics since 2016 on a sustainability rating for funds and a global sustainability index family. Training arms, webinars and conferences add further outlets for the same research.

Against that volume of documents, the corporate mark is often just a name or a set of initials, repeated across reports, notices and dashboards. This guide sets out what can be checked about each firm — who founded it, who owns it and how it is regulated — and marks clearly what rests only on the company’s own word.

A partner first, then the owner.

Morningstar arrived as a partner. Since 2016, the April 2020 announcement said, the two companies had worked together on analytics including a sustainability rating for funds rooted in Sustainalytics’ company ratings, which Morningstar called the industry’s first, and a global sustainability index family. In 2017 Morningstar took a stake of about 40 percent, InvestmentNews reported, describing Sustainalytics as a Dutch-domiciled company.

On 21 April 2020 Morningstar announced an agreement to buy the remaining 60 percent or so, with closing expected early in the third quarter. At that point, the announcement said, the Dutch-domiciled firm had more than 650 staff in 16 offices, including more than 200 analysts covering more than 40 industry groups, and worked with hundreds of asset managers and pension funds as well as hundreds of companies. Morningstar said it planned to keep investing in the existing business while bringing ESG data into its own research for individual investors, advisers, private equity firms, asset managers and owners, plan sponsors and credit issuers, and that all the staff were to join under the existing Sustainalytics leadership team. Jantzi said the new ownership would “amplify” the firm’s ability to bring ESG insights to investors and companies. Private Banker International reported on 6 July 2020 that Morningstar had completed the purchase and kept more than 650 Sustainalytics employees and the executive team.

Today the business presents itself as Morningstar Sustainalytics, listed on Morningstar’s websites as a product beside Morningstar Direct, PitchBook Direct and DBRS Credit Ratings. It says it has worked for more than 30 years “to put the promise of sustainable investing into practice,” and gives its mission as providing the insights investors and companies need for “a more just and sustainable global economy.” Its website says its data and insights let investors and companies “spend less time grappling with ESG and climate, and more time making the most of it.” It sells to institutional investors and to companies, including issuers of sustainable bonds.

For a design guide, Sustainalytics shows a research name that kept its own identity after joining a larger group. Compare its owner Morningstar and Morningstar DBRS, the credit rating business in the same group. For this guide we use a deep green, moss and sand with a sans, an unofficial interpretation; no product or logo is reproduced.

Keep Sustainalytics’s identity on hand — save it to a board in the Made Good inspiration library.