MSCI Inc. has acquired First Street, a provider of physics-based climate risk data, for $120 million to enhance its global physical climate risk capabilities for financial decision making. The acquisition allows MSCI to integrate First Street’s data into its climate and geospatial solutions, enabling quantified assessments of physical climate risk across more than 2 billion structures worldwide. This move addresses the growing demand from investors and financial institutions for embedded physical climate risk insights to navigate accelerating climate-related hazards.

The integration of First Street’s multi-hazard models will provide clients with validated assessments of current and future physical risk exposure, asset damage, and business interruption. These models translate physical hazards into measurable financial impact estimates using proprietary data on building characteristics and infrastructure dependencies. The platform delivers these insights through visualizations and customizable analytics for individual properties, companies, and portfolios within a unified AI-enabled workflow.

First Street’s research indicates that companies have become more than 6.5 times as likely to issue profit warnings following extreme weather events in the past two decades. The acquisition is expected to help institutions meet rising regulatory and reporting requirements while supporting physical risk management and adaptation planning. Major European central banks already use MSCI data to identify climate risks across their loan books.

Richard Mattison, Head of Sustainability and Climate at MSCI, stated that the financial consequences of asset location have come into sharp focus due to geopolitical turmoil and climate hazards. He noted that the integration of First Street data will enable clients to be better informed about changing risk exposures and translate that directly into financial decision-making.

Matthew Eby, Founder and CEO at First Street, said that joining MSCI puts their property-level science in front of leading investors and turns climate risk from a disclosure exercise into a daily input for capital allocation. The transaction consideration includes a cash payment of $120 million at closing, subject to adjustments, with potential for additional cash payments in the first two years if revenue thresholds are achieved.

The transaction is expected to close in the third quarter of 2026, subject to regulatory approvals and customary closing conditions. Following the closing, First Street’s financial results will be reported within MSCI’s Sustainability and Climate segment.

Transaction Details

MSCI released the results of the MSCI 2026 Market Classification Review, announcing the reclassification of Bulgaria from Standalone Market status to Frontier Market status. The decision follows a consultation launched in 2024 and reflects material improvements in liquidity and the completion of Bulgaria's transition to the euro on January 1, 2026. The reclassification will be implemented across all standard, custom, and derived MSCI Indexes coinciding with the May 2027 Index Review. Additionally, MSCI reminded investors of the upcoming reclassification of Greece from Emerging to Developed Market status, also effective at the May 2027 Index Review.

The review assessed the investability of several markets, acknowledging steps taken by Indonesia and Turkey to address shareholder transparency and coordinated trading concerns while noting the potential for future consultations if credible progress is not observed by the November 2026 MSCI Index Review. MSCI also welcomed the removal of floor prices in Bangladesh but cautioned that reintroduction could trigger a consultation on reclassifying the market to Standalone status. Ongoing monitoring of the Korean equity market's accessibility for international institutional investors continues, with specific focus on currency deliverability and operational flexibility.

Market Accessibility Criteria

The MSCI 2026 Global Market Accessibility Review provides a detailed assessment of market accessibility for each equity market included in the MSCI Indexes. The review evaluates the following five market accessibility criteria:

These criteria reflect areas that international institutional investors generally place strong emphasis on when evaluating investment accessibility of a market. MSCI uses 18 distinct accessibility measures to assess these five criteria, described in detail in the report.

Market Classification Framework

Market accessibility, along with economic development and size and liquidity, determine the classification of markets into Developed, Emerging, Frontier, and Standalone Markets. The classification of markets is a key input in the process of index construction as it determines the composition of the investment opportunity sets to be represented. "The MSCI Market Classification Framework determines whether a market is developed, emerging, or frontier based on the accessibility and investability that international institutional investors actually experience," said Raman Aylur Subramanian, Head of Market Classification and Taxonomies.