The Financial Conduct Authority (FCA) has opened a consultation on how it should regulate ESG ratings providers, in a move the regulator estimated could deliver around £500m in net benefits over the next decade.
ESG ratings inform investment decisions, risk management and regulatory reporting, but the market has developed "quickly and without formal oversight", the government said when it decided to place ESG ratings within the FCA's remit in October. Around half of those who use ESG ratings shared concerns about how they are built (55%) and how transparent they are (48%), according to research conducted by FCA. The proposals have been designed to address these concerns and focus on four areas: increased transparency; improved governance, systems and controls; the identification and managemen...
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