"The UK's financial watchdog is preparing to bring Environmental, Social and Governance (ESG) ratings agencies under formal regulation for the first time, in what is being described as the most sweeping overhaul of sustainable finance rules in the country's history."
"Ratings agencies assess companies and funds on environmental impact, social responsibility and governance standards. But the sector's explosive growth has triggered persistent concerns about inconsistent scoring, opaque methodologies and potential conflicts of interest, particularly where ratings providers also offer consultancy services to the same firms they assess."
""We particularly welcome the emphasis on transparency and consistency with international standards," he said, noting alignment with earlier recommendations from the International Organisation of Securities Commissions (IOSCO)."
The Financial Conduct Authority (FCA) has launched a consultation to formally regulate Environmental, Social and Governance (ESG) ratings agencies. The ESG ratings sector has grown into a $2.2bn global industry as investment managers increasingly embed ESG criteria. Persistent concerns include inconsistent scoring, opaque methodologies and potential conflicts of interest where ratings providers also offer consultancy to the same firms. Proposed rules would require agencies to disclose methodologies and data sources and to identify and manage conflicts. The FCA estimates regulation could generate £500 million in net benefits over the next decade and align with IOSCO recommendations.
Read at Business Matters
Unable to calculate read time
Collection
[
|
...
]