As financial services firms integrate ESG into activities and expand their ESG-focused products, they are increasingly reliant on third-party ESG data and ratings services.
In feedback statement on ESG integration in UK capital markets (FS22/4), expressed support for introducing regulatory oversight of certain ESG data and ratings providers.
Support greater transparency and trust in market for ESG data and ratings services.
If Treasury extends regulatory perimeter, FCA to take steps to develop and consult on proportionate, effective regulatory regime, focus on areas in IOSCO recommendations.
Transparency, governance, management of conflicts of interest, systems and controls.
While UK GVT considers this, and to maintain momentum, FCA working to convene and support industry participants to develop and follow a voluntary code of conduct.
Appointed the International Capital Market Association (ICMA) and the International Regulatory Strategy Group (IRSG) as the Secretariat leading the group's work.
The Secretariat will convene independent group to develop the code; FCA, BoE, other relevant financial regulators and government departments will sit as active observers.
The group will be co-chaired by M&G, Moody’s, London Stock Exchange Group (LSEG) and Slaughter and May, and composed of stakeholders including investors, ESG data and ratings providers, and rated entities; will aim to meet for first time later this year.
FCA also updated its sustainable finance webpage with information on code of conduct.
ICMA Press Release
On the same day, ICMA announced appointment by FCA to jointly provide Secretariat for a working group to develop a code of conduct for ESG data and ratings providers.
CEO welcomed the mandate from FCA to conduct this working group with the IRSG.
Combined, in-depth experience of UK and global financial markets will help ensure an unbiased and balanced approach to the development of code for market participants.