MSCI Inc. has announced the acquisition of First Street, a specialist in physical climate risk analysis. This acquisition aims to significantly expand MSCI's existing capabilities in assessing climate change-related physical risks. First Street provides detailed, physics-based data and analytics for real estate assets worldwide, which is becoming increasingly important for investors and financial institutions to make informed decisions and optimise risk management processes. The transaction includes a cash payment of USD 120 million at closing, plus potential additional cash payments in the first two years after closing, tied to the achievement of specific revenue thresholds.
The integration of First Street’s proprietary data and analytical tools into MSCI’s comprehensive climate and geospatial solutions enables a quantified assessment of financially relevant physical climate risks. This affects over two billion buildings globally and relates to every geographical location. The functionality includes the analysis of multi-hazard models that process climate signals and are validated based on observed events. This allows for precise evaluation of current and future exposure risks to physical hazards, potential asset damage, and business interruptions.
Strategic Relevance and Market Requirements
The background to this acquisition is the globally increasing relevance of climate-related physical risks. Investors, financial institutions, and companies require precise insights that can be directly integrated into investment and risk processes. Studies by First Street show that the probability of profit warnings after extreme weather events has increased by more than 6.5 times in the last two decades. The enhanced analytical capabilities can help institutions meet growing regulatory requirements and reporting obligations, as well as support the management of physical risks and the planning of adaptation and resilience measures.
First Street’s models transform physical hazards into measurable estimates of financial impacts. This is achieved using proprietary data on building attributes, infrastructure dependencies, and site-specific adaptation measures. The insights provided are visualised via an interactive platform and made accessible through on-demand, customisable analyses for individual properties, companies, and portfolios within a unified, AI-powered workflow.
Outlook and Transaction Details
Richard Mattison, Head of Sustainability and Climate at MSCI, emphasised that the financial impact of asset location has come into sharper focus due to geopolitical turbulence, supply chain disruptions, and increasing climate risks. Investors, lenders, and insurance companies are seeking deeper and more actionable analysis for the physical risks associated with corporate operations and investments. The integration of First Street’s data into MSCI’s existing geospatial capabilities will enable clients to obtain better information on changing risk exposures and directly incorporate these into financial decisions.
Matthew Eby, Founder and CEO of First Street, explained that his organisation was founded on the belief that every financial decision must consider climate change. Through the merger with MSCI, First Street’s object-based science will be made accessible to leading investors, lenders, and insurance companies globally, aiming to establish climate risks as a daily input for capital allocation.
The closing of the transaction is expected in the third quarter of 2026 and is subject to customary regulatory approvals and closing conditions. Upon successful completion, First Street’s financial results will be reported under MSCI's 'Sustainability and Climate' segment.
