Sustainalytics
Sustainalytics, now operating as Morningstar Sustainalytics following its 2020 acquisition by Morningstar, Inc.
Profile
Provides ESG ratings, climate data, and regulatory compliance tools to help investors and companies assess sustainability risks and opportunities.
Sustainalytics, now operating as Morningstar Sustainalytics following its 2020 acquisition by Morningstar, Inc. (Nasdaq: MORN), is an ESG research and ratings provider headquartered in Toronto, Canada. Founded in 1992, the company covers 40,000 companies globally and issues ESG Risk Ratings on 20,000 companies and 172 countries. Its product suite includes climate transition tools, regulatory compliance solutions (e.g., CSRD double-materiality assessments), and core ESG research, alongside second-party opinions for green and sustainable bonds.
The company serves institutional asset managers, pension funds, and corporations, with named clients including Holaluz, FYI Resources Ltd., The Co-operative Bank, Westports, and Ossia. Financially, Morningstar does not break out Sustainalytics' standalone revenue, but Morningstar's 2024 annual report (filed February 2025) showed total revenue of $2.2 billion, with the ESG segment (largely Sustainalytics) contributing approximately $350 million, a decline from $380 million in 2023, reflecting a challenging ESG data market. In early 2025, Sustainalytics laid off 80 employees, its second major reduction in two years, as part of cost-cutting amid slower growth.
The company's leadership is now headed by President David Pagliaro, with Adam Fleck as Head of Research and Methodology. Sustainalytics has won industry awards in 2025, including a Buy-Side Technology Award and an Environmental Finance Impact Award. The firm faces headwinds from regulatory fragmentation, ESG backlash in the U.S., and increased competition from MSCI, S&P Global, and Bloomberg.
Products by Sustainalytics
Who buys this
- Institutional asset managers integrating ESG factors into investment decisions
- Pension funds and sovereign wealth funds requiring ESG risk screening
- Corporations seeking ESG risk ratings for stakeholder communication and bond issuance
- Financial advisors and wealth managers using ESG data for portfolio construction
- Banks and credit issuers needing second-party opinions on sustainable bonds
Publicly disclosed clients
- Holaluz
- FYI Resources Ltd.
- The Co-operative Bank
- Westports
- Ossia
Strengths and what to watch
Strengths
- Covers 40,000 companies with ESG Risk Ratings on 20,000, providing broad market coverage across geographies and sectors.
- Acquired by Morningstar in 2020, giving it access to a large distribution network and integration with Morningstar's fund data and indexes.
- Recognized as a leading second-party opinion provider for green and sustainable bonds, with a strong track record in the sustainable finance market.
Watch for
- Revenue declined from $380 million in 2023 to ~$350 million in 2024, and the company laid off 80 employees in early 2025, indicating ongoing cost pressures and market slowdown.
- ESG backlash in the U.S. and regulatory fragmentation (e.g., CSRD in Europe vs. anti-ESG legislation in some U.S. states) could reduce demand for ESG ratings and data.
- Intense competition from MSCI, S&P Global, Bloomberg, and other ESG data providers may pressure pricing and market share.
Key Information
- Industry
- ESG
- Founded
- 1992
- Headquarters
- Toronto, Canada
Frequently Asked Questions
What is Sustainalytics and what do they do?
Sustainalytics, now Morningstar Sustainalytics, is an ESG research and ratings provider. It offers ESG risk ratings, climate data, and regulatory compliance tools to help investors and companies assess sustainability risks and opportunities across 40,000 companies globally.
How many companies does Sustainalytics cover with ESG ratings?
Sustainalytics covers 40,000 companies globally and issues ESG Risk Ratings on 20,000 companies and 172 countries. This broad coverage spans multiple geographies and sectors, making it one of the largest ESG data providers in the market.
Is Sustainalytics owned by Morningstar?
Yes, Morningstar, Inc. acquired Sustainalytics in 2020. The firm now operates as Morningstar Sustainalytics. This acquisition gave Sustainalytics access to Morningstar's distribution network and integration with its fund data and indexes, expanding its reach.
Why did Sustainalytics lay off employees in 2025?
Sustainalytics laid off 80 employees in early 2025 as part of cost-cutting amid slower growth. This was its second major reduction in two years, reflecting a challenging ESG data market and a revenue decline from $380 million in 2023 to about $350 million in 2024.
What are Sustainalytics' ESG Risk Ratings used for?
Sustainalytics' ESG Risk Ratings measure a company's exposure to industry-specific material ESG risks and how well it manages those risks. Institutional asset managers, pension funds, and corporations use these ratings for investment decisions, risk screening, and stakeholder communication.
Who are some notable clients of Sustainalytics?
Notable clients include Holaluz, FYI Resources Ltd., The Co-operative Bank, Westports, and Ossia. Sustainalytics serves institutional asset managers, pension funds, corporations, financial advisors, and banks, providing ESG data, ratings, and second-party opinions for sustainable bonds.
Sources
- www.sustainalytics.com — Leadership team, mission, awards, and general company description
- www.sustainalytics.com — Acquisition by Morningstar in 2020, coverage of 40,000 companies and ratings on 20,000 companies and 172 countries
- www.responsible-investor.com — 80 employees laid off in early 2025, second major layoff round
- www.responsible-investor.com — Revenue decline in 2024, challenging market conditions
- www.sustainalytics.com — Named clients: Holaluz, FYI Resources Ltd., The Co-operative Bank, Westports, Ossia