Can MSCI’s Acquisition of First Street Transform Climate Risk Analytics?

MSCI’s acquisition of First Street strengthens its climate risk analytics capabilities, helping investors better assess and manage environmental risks across global markets.

In order to greatly increase its capacity to provide property level physical climate risk insights to investors, lenders, insurers, and enterprises worldwide, MSCI has decided to purchase climate risk analytics vendor First Street.

The acquisition adds to MSCI’s climate and geospatial intelligence platform as more financial institutions are embedding physical climate risks into their decision-making across investment, lending, underwriting and portfolio management. Financial terms include a cash payment of $120 million at closing, subject to customary adjustments, and the possibility of additional payments based on revenue performance in the first two years after completion.

The transaction is expected to close in the third quarter of 2026, subject to satisfaction of customary closing conditions and receipt of regulatory approvals.

The purchase highlights the rising demand for climate risk data that is specific to location, as investors and financial institutions seek to improve their understanding of the possible impacts of extreme weather events, rising temperatures, flooding, wildfires and other climate-related risks on asset prices and financial performances. Physical climate risk has evolved from a sustainability concern to a crucial financial consideration due to recent climatic occurrences, changing regulatory requirements, and disclosure standards.

“The financial consequences of where assets are located have come into sharp focus due to the recent geopolitical turmoil, supply chain disruption and the growing impact of climate hazards.” -  Richard Mattison, Head of Sustainability and Climate, MSCI. 

Companies are now more than six times as likely to issue profit warnings after catastrophic weather events as they were twenty years ago, according to First Street data, highlighting the mounting financial consequences of climate-related disruptions.

Customers will be able to evaluate physical climate risks across more than two billion properties globally by combining First Street's property-level analytics with MSCI's current climate, sustainability, and geospatial capabilities. The improved capabilities are intended to assist organizations in measuring possible effects, from more general operational and investment risks to asset damage and business disruption.

CIO Bulletin is of the view that the investors require more in-depth data-driven insights to assess long-term risks and opportunities as climate-related events continue to impact markets, companies, and asset values.