Environmental, social and governance (ESG) ratings: proposed approach to regulation

The Financial Conduct Authority (FCA) consulted on rules to improve transparency and trust in the environmental, social and governance (ESG) ratings market.

From 29 June 2028, any firm wishing to provide certain types of ESG ratings in the UK will need FCA authorisation. The FCA consulted on proposed rules and guidance for the regulation of ESG ratings providers, following recent legislation from HM Treasury to bring ESG ratings within the FCA regulatory perimeter.

The FCA wants to:

• make ESG ratings more transparent, reliable and comparable
• support better decision-making and greater confidence in the market
• be proportionate and support growth in sustainable finance.