We welcome the government’s legislation to bring Environmental, Social and Governance (ESG) ratings providers into our remit. This marks a significant milestone in the UK’s commitment to enhancing transparency and trust in this market.
ESG ratings continue to play a critical role in influencing investment and capital allocation decisions. The legislation, which was broadly supported by the industry, will provide us with the necessary powers to regulate ESG ratings providers – an important step towards ensuring that there are transparent, reliable and comparable ESG ratings.
In parallel with the Government finalising its legislation, we have been developing our regime for ESG ratings. Now that the legislation has been laid before Parliament, we intend to consult on our proposed rules before the end of the year.
We are committed to working with industry, government and wider stakeholders to ensure our approach to regulation is practical, proportionate and supports innovation. This is an opportunity to raise the bar for transparency and trust, while ensuring the market remains competitive and resilient.
Our proposals, informed by the International Organization of Securities Commissions (IOSCO)[2] recommendations, will focus on four key areas: transparency, governance, systems and controls, and conflicts of interest. We will also be producing guidance to help firms assess whether their activities will fall under regulation and require our authorisation.
This will support our work to enhance the UK’s reputation as a global hub for sustainable finance – attracting investment and supporting growth and innovation.
Further information
Read Government’s Statutory Instrument[3].