RiskMetrics Group (NYSE: RMG), a leading provider of risk management and corporate governance services, has acquired KLD Research & Analytics Inc. for $10 million in cash, the firm announced today.

Sarah Cohn, a RiskMetrics spokesperson, provided the purchase price and said KLD generates about $6 million in annual revenue.

Boston-based KLD is a well-known research firm among socially responsible investors and a leader in environmental, social and governance (ESG) research and indexes for institutional investors. In 1990, KLD created the FTSE KLD 400 Social Index (KLD400)--the first socially responsible investment benchmark (formerly KLD's Domini 400 Social Index)--to measure how social and environmental screens affect investment performance. KLD recently launched the new Global Socrates platform, which provides an unprecedented level of detail about the ESG performance of nearly 4,000 global companies, Cohn said.

The acquisition was anticipated and marks the second time that RiskMetrics has purchased an ESG research firm in nine months. In February, RiskMetrics announced it was buying New York-based Innovest Strategic Value Advisors, which had revenue of $7 million in 2008. Matthew Kiernan, a longtime advocate of sustainable investing, cofounded Innovest in 1995. Earlier this month, RiskMetrics confirmed that Kiernan would be leaving the firm to pursue other interests.

KLD has the most widely used database on corporate social performance. Led by Peter Kinder, president, and Tim Brennan, chief operating officer, KLD provides ESG research, compliance screening and indices to over 500 investment professionals worldwide. Founded in 1988, KLD published the first research designed to evaluate the risks and opportunities associated with corporate social and environmental performance. Today, 30 of the top 50 institutional money managers use KLD services to integrate ESG factors into investment decisions.

However, KLD expects to be able to reach new markets as a result of its merger with the much larger RiskMetrics. RiskMetrics released its 2009 third-quarter results today and reported revenue was $74.0 million, down 2.1%, and net income was $7.8 million, up 23.9%, from 2008's third quarter. Revenue for the nine months ended September 30 increased 2.7% to $226.9 million and net income was $23.5 million, up 93%.

"Our clients have indicated that ESG performance is a critical benchmark of a corporation's risks and long-term value," said Knut Kjaer, president of RiskMetrics Group. "KLD's ESG capabilities, combined with our financial risk and corporate governance experience, will give investors worldwide a more thorough picture of sustainability and risk across geographic and industry boundaries."

"RiskMetrics' commitment to sustainability has made a strong impression on KLD," said Kinder. "Both firms have long strived to make ESG analysis an integral part of mainstream investment research. By joining with RiskMetrics, we can serve more global investors than ever before."