New UK legislation means that ESG ratings providers now have to be authorised and regulated by the FCA (Financial Conduct Authority).

The move comes after ESG ratings providers’ practices have faced increased scrutiny in UK and across Europe.

In a statement, the FCA said, “We welcome the government’s legislation to bring ESG ratings providers into our remit. The legislation will provide us with the necessary powers to regulate ESG ratings providers, and 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.

Our proposals 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”.

END