Financing 1.5°C: What’s Driving ESG-Related Mergers?

Large financial institutions are increasingly acquiring smaller firms specializing in environmental, social, and governance (ESG) expertise to improve their analytical capabilities regarding climate risk. This trend is driven by the need for high-quality data and the ability to integrate forward-looking climate scenarios into risk frameworks, partly spurred by the TCFD recommendations. The author predicts a similar wave of M&A activity will shift toward 'climate alignment'—the process of aligning portfolios with 1.5°C targets—as financial firms seek the proprietary data and technology necessary to meet net-zero commitments.

• Large financial firms are using mergers and acquisitions to overcome two primary obstacles in understanding climate risk: a shortage of high-quality data on corporate resilience and the difficulty of integrating that data with forward-looking climate scenarios and existing risk models.
• The trend of ESG-related M&A is exemplified by significant deals, such as Goldman Sachs' $1.9 billion acquisition of NN Investment Partners and Moody's $2 billion purchase of the climate risk analysis firm RMS.
• The author anticipates a transition in M&A activity from climate risk (what might happen) to climate alignment (what should happen), as firms seek the capabilities needed to align lending and investment portfolios with net-zero targets and 1.5°C goals.
• To facilitate the energy transition, the RMI Center for Climate-Aligned Finance argues for a standardized, transparent baseline of corporate climate data—including emissions and capital expenditure plans—to serve as a public foundation upon which firms can build proprietary analytical tools.

APA

RMI (2021). Financing 1.5°C: What’s Driving ESG-Related Mergers? https://rmi.org/resources/financing-1-5c-whats-driving-the-wave-of-esg-related-mergers/

Chicago

RMI. Financing 1.5°C: What’s Driving ESG-Related Mergers? 2021. https://rmi.org/resources/financing-1-5c-whats-driving-the-wave-of-esg-related-mergers/.

Wikipedia

{{cite report |author=RMI |title=Financing 1.5°C: What’s Driving ESG-Related Mergers? |date=30 August 2021 |url=https://rmi.org/resources/financing-1-5c-whats-driving-the-wave-of-esg-related-mergers/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2021financing, author = {{RMI}}, title = {{Financing 1.5°C: What’s Driving ESG-Related Mergers?}}, institution = {RMI}, year = {2021}, month = aug, url = {https://rmi.org/resources/financing-1-5c-whats-driving-the-wave-of-esg-related-mergers/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }