Advisers have been told to expect renewed scrutiny of how they use ratings in sustainability-led portfolios, following the Financial Conduct Authority’s (FCA) consultation on regulating ESG ratings providers.
Speaking to Professional Adviser, Rathbones head of sustainability David Harrison warned of "inconsistent", "noisy" and sometimes "contradictory" ESG scores. He said the FCA's intervention comes at a critical time for advisers and discretionary fund managers who rely heavily, but cautiously, on ESG ratings to screen and construct portfolios. "The biggest frustration is that you can run a portfolio through two different ESG systems and get completely different outcomes," he said. "Inconsistency in ESG ratings is definitely an issue." FCA consultation Earlier this week, the regulat...
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