Morningstar to Cut up to 12% of Staff at Its ESG Services Provider Unit

Morningstar will cut the global workforce of its ESG (environmental, social and governance) service provider arm Sustainalytics by 10-12% as it integrates the firm into its indexing business.

The decision comes after Morningstar said in June it would move to align more closely with Sustainalytics.

More Than 200 Layoffs Possible

Amsterdam-based Sustainalytics employs more than 1,800, according to its website, meaning job losses could exceed 200.

“As a part of this alignment, we are in the process of making adjustments to strengthen the financial footing of the business,” a Morningstar spokesperson said.

“Unfortunately, headcount reductions in addition to other expense reductions are part of the mix. 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.”

Morningstar didn’t disclose which employees would be affected by the cuts.

Morningstar Bought Business in 2017

Morningstar acquired a 40% stake in Sustainalytics in 2017 before buying it outright in 2020 after paying a lump sum of $59 million and two further cash payments amounting to a total valuation of $181 million.

Sustainalytics was one of the key contributors to Morningstar’s organic revenue growth in the second quarter of this year, which grew 12.7%, driven by strong demand for regulatory compliance in Europe.