Morningstar’s ESG analytics group, Sustainalytics, has announced that it will lay off up to 12 percent of its workforce next week. This decision was disclosed during a recent town hall meeting, where the company revealed that between 150 and 180 employees would be let go. However, the specific departments or geographies affected by this action have not been disclosed.
Teams working on sustainability bond assessments in the Singapore and Hong Kong offices were let go in June. The company, which was founded in 2009 by Canadian sustainability veteran Michael Jantzi, was fully acquired by Morningstar in 2020. Despite aggressive hiring since then, financial and political headwinds have led Sustainalytics to rethink its approach.
The demand for sustainability data mainly comes from investors in Europe, but most European providers have been acquired by large North American firms in recent years. However, the pushback against sustainability in the United States has reportedly prompted a more conservative approach to ESG activities at these firms, reducing demand for their services.
The management of Sustainalytics has also undergone changes recently, with Ron Bundy taking over leadership following the departure of its president, Bob Mann. This reshuffling was aimed at expanding the two firms’ ESG work rather than reducing it.
The company committed to a 90-day review, which appears to have resulted in the decision to reduce its workforce further.
Morningstar spokesperson Sarah Wirth stated that the staff reductions and other expense cuts aim to strengthen the financial footing of the business. She added, “While it has been a very difficult decision, we plan to reduce our global headcount at Sustainalytics by 10-12% to ensure we can get the business on healthy financial footing to be able to move forward and grow.”
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Jack McPherrin ([email protected]) is a managing editor of StoppingSocialism.com, research editor for The Heartland Institute, and a research fellow for Heartland's Socialism Research Center. He holds an MA in International Affairs from Loyola University-Chicago, and a dual BA in Economics and History from Boston College.
