The UK government is considering increasing scrutiny of ESG ratings and data providers with possible new regulations from the Financial Conduct Authority.

In a UK government Treasury report entitled, “Greening Finance: A Roadmap to Sustainable Investing” that explains the framework for the UK’s new Sustainable Disclosure Requirements, it said ratings and data providers offer information that “may not always be comparable” with  ratings in other areas of the market, making it open to greenwashing. It added that it is therefore considering bringing providers under the scope of the FCA.

“It is important that providers deliver ESG data and ratings transparently, and that they have strong governance and management of conflicts of interests,” the report says. “The government is therefore considering bringing these firms into the scope of FCA authorisation and regulation. The government will set out further detail next year.”

Read the full report.