Dive Brief:
- Corporate governance and proxy advisory firm Glass Lewis and artificial intelligence sustainability platform Clarity AI have combined to create a single company, the pair announced last week. The new company aims to help institutional investors manage investment analysis, sustainability, governance, engagement and voting in one platform, according to a Sept. 24 release.
- The transaction closed on Wednesday, but no financial details about the deal were disclosed, the press release said. Each company will continue operating under its current name and branding, but “a new brand strategy and architecture” is expected to be introduced at the beginning of the new year, a Glass Lewis spokesperson told ESG Dive Monday.
- The companies complement each other in terms of jurisdiction expertise. Both are global entities, but the merger will allow clients to leverage Glass Lewis’ more dominant presence in the U.S., while Clarity AI has a heavily European client network.
Dive Insight:
Glass Lewis was founded in 2003 and grew to account for an estimated 42% of the proxy advisory market’s assets under advice by 2021, according to the Harvard Law School Forum on Corporate Governance. Clarity AI launched in 2017 and has “particularly strong roots and capabilities in Europe,” which the companies said remains the global center of sustainable investing.
“Rarely do business opportunities arise that satisfy three key factors: strategic fit, market conditions and client needs,” the companies said in a FAQ section on the deal. “The opportunity to combine Clarity AI and Glass Lewis meets these criteria.”
The companies said that Glass Lewis and Clarity AI said the pair make a good strategic fit, as they “have complementary strengths and currently serve two ends of the investment spectrum.”
Clarity AI helps institutional investors construct, monitor and report on their portfolios, and Glass Lewis helps investors with stewardship responsibilities post-investment. The market conditions and client needs that led to the deal both center on increased data requests and needs across the full lifecycle of investment and ownership in an asset or company.
“This union brings together two highly complementary sets of capabilities to support clients across the full decision-making ecosystem, from portfolio construction and monitoring to research, engagement, voting and reporting,” Glass Lewis CEO Bob Mann said in the release.
The company’s collective workforce includes more than 900 employees across 20 worldwide offices, according to the press release. It will also have a global center of excellence for sustainability, data and AI innovation in Madrid, Spain.
As privately held companies, neither Glass Lewis nor Clarity AI publicly report their revenue.
Clarity AI CEO and founder Rebeca Minguela said in the release that combining Clarity’s AI, technology and sustainability with Glass Lewis’ “depth in governance and stewardship” will allow the combined company to create “a differentiated, integrated platform with deep decision-relevant data and unparalleled expertise.”
The companies said they will integrate their products in a phased approach, while continuing to support existing products from each company. One of the “central objectives” of the new company will be to “pair Clarity AI’s scale and data capabilities with Glass Lewis’ domain expertise and quality disciplines so that analytics are increasingly decision-relevant, transparent, and auditable.”
Responding to a question about whether “Glass Lewis’ research and voting recommendations remain independent,” the companies said they are looking to expand capabilities “while preserving the rigor, transparency and governance required for research and voting services.”
Clients of the combined company will get “a more complete view of investment and ownership activities, fewer disconnected workflows and stronger continuity between analysis, engagement, voting and reporting,” according to the release.
Glass Lewis’ share of the proxy advisory market has made it a target for the Trump administration. Collectively with competitor Institutional Shareholder Services, Glass Lewis and ISS accounted for 97% of the market by 2024. In a December executive order, Trump targeted the two firms as “foreign and politically-motivated proxy advisors.” The firms have also looked to fight a number of state laws designed to compel disclosures that have been ruled unconstitutional in multiple instances.
