The UK Financial Conduct Authority (FCA) has proposed new transparency and governance requirements for the ESG ratings market.
Recent legislation introduced by the Treasury, subject to parliamentary approval, will bring ESG ratings providers into the FCA’s regulatory mandate.
The proposed new rules would introduce:
- Minimum disclosure requirements on methodologies, data sources and objectives
- Obligations to maintain operational responsibility over the ratings process
- Requirements to identify, prevent, manage, and disclose conflicts of interest
Sacha Sadan, director of sustainable finance at the FCA, stated: “Our proposals will give those who use ESG ratings greater trust and confidence – supporting our goal of increasing trust and transparency in sustainable finance. This will enhance the UK’s reputation as a global sustainable finance hub – attracting investment and supporting growth and innovation.”
The FCA’s proposals are open for consultation until 31 March 2026. The regulator expects to issue the final rules in Q4 next year, with the requirements taking effect from June 2028.
