1 August 2023

Sustainalytics biggest SPO provider in first half of 2023

Sustainalytics provided the most sustainable finance second-party opinions (SPOs) in the first six months of 2023, whilst Moody's ESG saw its market share jump to become the third largest provider.

According to figures from Environmental Finance Data, Morningstar-owned Sustainalytics published 69 public SPOs during the first half of 2023 – 21% of the total published during the period.

This means that Sustainalytics has retained its market-leading position held in 2022. According to data provided in the Environmental Finance 'Sustainable Bonds Insight' report, Sustainalytics held a 24% SPO market share in 2022 as a whole. But, Sustainalytics has seen its market share continue to decline since it captured a 30% share in the first half of 2022.

Among the assessments Sustainalytics undertook were those for the sustainability-linked bonds from ground-breaking sovereign issuer Chile and Finnish tyre manufacturer Nokian, green finance frameworks from Dutch supermarket Ahold Delhaize and Mexican cement maker Cemex, and a social bond review for Indian microfinance firm CreditAccess Grameen.

In the first half of 2023, S&P Global became the second largest SPO provider after it saw its market share rise to 19%. This was helped by it acquiring major SPO rival Cicero Shades of Green in late 2022, resulting in a combined total for the first half of 2023. In 2022, S&P and Cicero Shades of Green held a combined market share of 19.9%.

S&P reviewed frameworks from issuers including privately-owned drinks firm Bacardi and confectionary company Mars, ground-breaking sovereign issuer Sharjah, as well as carmakers Mercedes-Benz, Stellantis and Volvo.

Among the five providers with a 10%-plus market share, Moody's ESG experienced the most material jump in its activity in the first half of 2023. Moody's market share reached 15% in the first six months of 2023, double the 7.4% share it held in 2022 as a whole and 6.7% in the first six months of 2022.

Moody's provided SPOs for issuers including sustainability-linked bond pioneer Enel, United Arab Emirates (UAE) renewable energy firm Masdar, and sovereign Mexico.

ISS ESG and DNV were the other two SPO providers with a market share in excess of 10% in the first half of the year – with 14% and 12% shares, respectively (see Table).

Sustainable finance second-party opinions provided in H1 2023

Sustainalytics 69 21%
S&P Global (including Cicero Shades of Green) 62 19%
Moody’s ESG 48 15%
ISS ESG 46 14%
DNV 39 12%
Kestrel Verifiers 22 6.80%
Japan Credit Rating Agency 13 4%
Rating and Investment (R&I) 10 3.10%
NINT 4 1.20%
Sustainable Fitch 3 0.90%
Bureau Veritas 3 0.90%
Source: Environmental Finance Data (efdata.org)  

The Environmental Finance figures are focused exclusively on SPOs, as opposed to other external review work – such as verification and assurance services. The figures include both new and updated assessments of green, social, sustainability, sustainability-linked and transition finance frameworks for bond and loans. Private SPOs are not included in Environmental Finance figures as it was unable to independently verify them.

The SPO market has been evolving rapidly through new product launches and market consolidation. Recent providers to enter the market including MSCI and Sustainable Fitch. What is more, as well as the Cicero Shades of Green acquisition by S&P, Moody's recently completed the integration of rival SPO provider Vigeo Eiris (V.E.). Following its acquisition of a majority stake in V.E. in 2019, Moody's eventually retired its own green bond assessment in favour of the SPO product provided by V.E.