Stock Profile: Moody’s

Socially responsible investing (SRI) is the foundation of Clean Yield’s investment strategy. Our SRI strategy includes negative screening, to avoid investments in industries or companies that conflict with our clients’ values, and positive screening, to actively seek out companies making a positive impact. Below is an example of the companies we include in our customized client investment portfolios, with a snapshot of the considerations we review. Stock profiles are not investment recommendations. Learn more about our investment strategy and services.

Moody’s (MCO) is a global risk assessment firm that specializes in credit ratings. It offers data, analytical solutions, and insights to help businesses identify opportunities and manage risks. Moody’s has a strong competitive edge, particularly in credit ratings, that has been built over decades, making it difficult for new entrants to replicate its credibility or the vast relationships it has with corporate issuers.

Moody’s offers a wide range of ESG data, ratings, and analytics, playing a crucial role in facilitating the shift toward sustainable finance. Its products help investors make informed decisions, integrate climate and social risks into their portfolios, and direct capital toward low-carbon and socially responsible projects. Additionally, its services drive transparency in the financial markets, supporting the transition to a more sustainable global economy.

Current Snapshot: Moody’s Is Helping Investors Make Informed Decisions

Moody’s operates in two main segments: Moody’s Investors Service (MIS), which publishes credit ratings and provides assessments for debt obligations and their issuers, and Moody’s Analytics (MA), which provides data, research, and decision-making solutions across various risk areas, including credit, supply chain, and climate. Both segments represent about 50% of 2023 revenue. 

Currently, Moody’s has a strong competitive advantage in its credit ratings segment, as the company’s ratings are highly regarded. Credit ratings, which are crucial for bond issuers and investors, create a network effect. Additionally, asset owners and managers rely on trusted credit ratings, especially for cross-border bond deals. Beyond bond issuers and investors, credit ratings are also valued by index providers, regulators, and other market participants. 

The established record of Moody’s ratings, combined with its strong relationships with thousands of companies, makes it unlikely that new players would be able to gain traction in this market. For example, in order to receive the nationally recognized statistical rating organization (NRSRO) designation from the SEC, an agency must already be widely recognized. While the number of NRSROs has increased since the Credit Rating Agency Reform Act of 2006, network effects have kept Moody’s and a few other firms as the dominant players, which is expected to continue.

Moody’s has made several acquisitions to further its data offerings and markets. In 2017, Moody’s acquired Bureau van Dijk, a leading provider of private and public company data. In 2020, the firm acquired Regulatory DataCorp (RDC), a leading provider of anti-money-laundering and Know Your Customer (KYC) solutions, bolstering Moody’s regulatory and compliance analytics. In 2021, Moody’s also acquired Risk Management Solutions (RMS), a global leader in climate and natural disaster risk modeling, strengthening Moody’s position in climate risk analytics. These acquisitions have added strategic value, particularly as Moody’s Analytics expands beyond traditional credit ratings into other high-demand areas like climate risk and KYC tools.

Moody’s does face risks that could impact its business. These includemarket fluctuations, the rise of private credit, and changing client needs in an evolving financial landscape, requiring Moody’s to continuously adapt to new industry requirements and technological developments to stay competitive. Moody’s faces periodic and ongoing risks due to regulatory scrutiny and potential negative publicity. The firm has a history of litigation and regulatory fines, including a 2017 settlement with the Department of Justice to resolve allegations arising from Moody’s role in providing credit ratings for Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDO), which contributed to the financial and banking/housing crisis in 2008. More recently, the firm has paid fines for price-fixing, record-keeping, and conflict-of-interest violations.  

Social and Environmental Impact Review

Moody’s has committed to a 50% reduction in Scope 1 and 2 emissions by 2030, using 2019 as their base year for measurement and the Greenhouse Gas Protocol standard for its emission calculations. The company’s long-term net-zero goals have a target reduction of 90% for Scope 1, 2, and 3 emissions by 2040. Scope 3 emissions account for an overwhelming part of Moody’s CO2 emissions: In 2023, the firm released 969 metric tons of CO2 related to Scope 1 and 2 emissions combined, whereas Scope 3 emissions were 133,970 metric tons.

Moody’s claims to have exceeded its 50% reduction goal and has currently reached a 94% reduction in its Scope 1 and Scope 2 emissions. It has also hit a 36% reduction in its Scope 3 emissions, meaning it exceeded its 2025 goal by 21%. As of the beginning of 2025, it has reached 54% of its 60% goal relating to suppliers using science-based targets.

Moody’s achieved 100% renewable electricity for global operations for the fourth consecutive year in 2024. Since 2000, the company has offset carbon emissions from its operations, employee commuting, and business travel. In 2023, 40% of waste from its office operations was recycled goods. Moody’s also has various carbon offset projects that differ depending on geographical location. 

Since 2020, Moody’s Executive Leadership Team has had sustainability-related performance metrics included as a factor in certain senior executives’ compensation. In 2021, these metrics were integrated into the Company’s Strategic and Operational metrics used to determine annual cash incentive payments for senior executives.

Moody’s has made important strides to be a leading global corporate citizen, prioritizing sustainability and meaningful impact. Clean Yield’s assessment of Moody’s has led us to offer this investment within our portfolio, as increased access to ESG data and sustainability reporting always puts us in a good mood.

Learn more about Moody’s.