KLD Research & Analytics

KLD Research & Analytics
Name	KLD Research & Analytics
Type	Private
Founded	1988
Founders	Amy Domini
Headquarters	Boston, Massachusetts
Industry	Research, Analytics, Socially Responsible Investing

KLD Research & Analytics is a research firm specializing in environmental, social, and governance screening, shareholder advocacy, and corporate ratings. It served as a primary source for socially responsible investment decisions used by asset managers, foundations, and pension funds, interacting with institutions such as Fidelity Investments, Vanguard Group, CalPERS, Trillium Asset Management, and TIAA. Its databases influenced indices and products associated with MSCI, Dow Jones, S&P Global, FTSE Russell, and Bloomberg.

History

KLD Research & Analytics was founded in 1988 by Amy Domini amid growing investor interest following events like the Bhopal disaster, the Exxon Valdez oil spill, and the passage of statutes such as the Superfund Amendments and Reauthorization Act of 1986. Early clients included Pension Fund of the City of New York, The Rockefeller Foundation, Ford Foundation, and Interfaith Center on Corporate Responsibility. In the 1990s KLD expanded coverage alongside milestones like the adoption of the Kyoto Protocol and the rise of ESG dialogues at United Nations Global Compact events. Throughout the 2000s KLD’s methodologies intersected with initiatives by CERES, Shareholder Rights Project, and Calvert Research and Management. In 2010 KLD, along with assets and indices, became integrated into larger index providers, connecting to operations at MSCI Inc. and collaborations involving Dow Jones Indexes and S&P Dow Jones Indices.

Research and Methodology

KLD developed screening frameworks grounded in incident-based research, company self-reports, regulatory filings, and third-party disclosures, comparable to approaches used by Morningstar, Sustainalytics, ISS, and RepRisk. Its criteria tracked controversies similar to cases at BP plc during the Deepwater Horizon oil spill and governance failures like those at Enron and WorldCom. KLD’s social screens covered labor disputes exemplified by actions at Nike, Walmart, and Foxconn, while environmental assessments drew parallels with emissions debates involving ExxonMobil, Chevron Corporation, and Royal Dutch Shell. KLD combined quantitative scoring with qualitative narratives as used by Moody's, Standard & Poor's, Goldman Sachs, and Morgan Stanley equity research desks, and integrated metrics employed by CDP (organization), Task Force on Climate-related Financial Disclosures, and Global Reporting Initiative.

Products and Services

KLD provided products including the KLD Domini Social Index-style screening tools, customized research reports, controversy alerts, and proxy voting guidance used by institutional investors such as BlackRock, State Street Corporation, BNP Paribas Asset Management, and Allianz Global Investors. Its datasets informed exchange-traded funds and indices like those constructed by iShares, Vanguard FTSE Social Index Fund, SPDR, and thematic products from Invesco. Advocacy services aligned with campaigns by Amnesty International, Oxfam, Sierra Club, and Greenpeace on issues ranging from supply chain labor to climate policy. KLD’s outputs were integrated into portfolio construction alongside tools from FactSet, Refinitiv, Bloomberg Professional Services, and Thomson Reuters platforms.

Corporate Structure and Ownership

The company operated as a private research firm and collaborated with asset managers such as Calvert, Domini Social Investments, Pax World, and Neuberger Berman. During corporate transitions, its databases and indices intersected with ownership and licensing arrangements involving MSCI Inc., S&P Global, Dow Jones & Company, and strategic partners like Bayerische Landesbank in institutional product development. Partnerships linked KLD’s intellectual capital to index licensing used by CME Group, NASDAQ, and fund issuers including Dimensional Fund Advisors and Charles Schwab Corporation.

Impact and Reception

KLD’s ratings influenced shareholder resolutions and stewardship campaigns similar to high-profile efforts at ExxonMobil that involved activists like Carl Icahn and institutional investors including New York State Common Retirement Fund. Academics at institutions such as Harvard Business School, Stanford Graduate School of Business, London School of Economics, and MIT Sloan School of Management cited KLD datasets in studies on corporate social performance, similar to analyses by scholars publishing in Journal of Finance and Academy of Management Journal. Nonprofits such as The Nature Conservancy and World Resources Institute referenced KLD-style metrics in policy dialogues at United Nations Framework Convention on Climate Change conferences and G20 summits. Media outlets including The New York Times, The Wall Street Journal, Financial Times, The Economist, and Bloomberg News reported on KLD-derived indices and controversy cases.

Controversies and Legal Issues

KLD’s screening decisions drew criticism from corporations and commentators paralleling disputes involving Chevron, Philip Morris International, Monsanto, and Walmart over methodology transparency and alleged bias. Debates echoed legal considerations similar to defamation and fair comment disputes seen in cases involving Hewlett-Packard and Bank of America reporting, prompting scrutiny by regulatory stakeholders such as the Securities and Exchange Commission and commentators from American Enterprise Institute and Brookings Institution. Litigation and contractual disputes around index licensing reflected industry-wide tensions comparable to matters involving NASDAQ OMX Group and ICE Data Services, while academic critiques compared KLD’s approaches to rival frameworks from Sustainalytics and MSCI ESG Research.

Category:Research companies Category:Socially responsible investing