Indexing Power: The MSCI–RiskMetrics–ISS Consolidation Story
If you want to understand how corporate governance and risk management became big business, look no further than MSCI’s strategic roll-up of firms like RiskMetrics and the complex legacy of ISS.
MSCI, born inside Morgan Stanley in 1968 and spun out in 2007, was originally known for its equity indexes. But under CEO Henry Fernandez, it pivoted hard into becoming a data powerhouse — focused on ESG, risk, and governance. That’s where RiskMetrics enters the picture.
RiskMetrics started as a Value at Risk tool inside JPMorgan in the 1990s, spun out in 1998 during the rise of institutional risk awareness. It expanded into governance by acquiring ISS (Institutional Shareholder Services) in 2006 — at the time, ISS was the undisputed kingmaker in proxy voting. Founded in 1985, ISS grew by serving pension funds and mutual funds with voting advice on shareholder proposals, eventually becoming one of the most powerful “quiet regulators” on Wall Street.
By 2010, MSCI saw the writing on the wall: risk and governance were becoming central to how capital was allocated. In a major $1.5B acquisition, MSCI bought RiskMetrics, and with it, ISS. The move expanded MSCI’s reach beyond passive indexing into the growing world of corporate risk and investor stewardship.
But that marriage didn’t last. In 2014, MSCI sold ISS to private equity firm Vestar Capital — a tacit admission that ESG proxy voting clashed with MSCI’s more quantitative, model-driven DNA. The business models were just too different. Yet both parts of the ecosystem — MSCI’s data and indexes, and ISS’s influence on voting — would only grow more central in the 2010s ESG boom.
Meanwhile, ISS kept consolidating too. It bought Ethix, IW Financial, and oekom — becoming the default ESG rater in Europe. Glass Lewis, its only real rival, stayed smaller but nimble under ownership by pension funds like Ontario Teachers’ and Alberta Investment Management.
Today, MSCI is a $40B+ market cap data empire. Its real genius? It owns the taxonomy: the indexes everyone benchmarks to and the factors everyone optimizes for. But the ecosystem it helped build — including RiskMetrics, ISS, and their progeny — quietly shaped how trillions are voted, invested, and managed.
It’s a story of spinouts, spinoffs, and the slow merger between data and power. Not flashy. But deeply consequential.
