FCA to develop Code of Conduct for ESG data and ratings providers

FCA has announced that it will be setting up a group to develop a voluntary Code of Conduct for Environmental Social and Governance (“ESG“) data and ratings providers.

This decision has arisen out of FCA’s Feedback Statement on ESG integration in UK capital markets (FS22/4). FCA believes that such a code would support greater transparency and trust in the market for ESG data and ratings services.

FCA has expressed its commitment to taking the necessary steps to develop and consult on a proportionate and effective regulatory regime (concentrating on the areas of particular urgency identified by the International Organization of Securities Commissions) were Treasury to extend FCA’s regulatory perimeter. While this is considered by Treasury, FCA has worked to convene, support and encourage industry participants to develop and follow a voluntary Code of Conduct with the International Capital Market Association and the International Regulatory Strategy Group appointed as the Secretariat.

The Secretariat will convene an independent group co-chaired by M&G, Moody’s, London Stock Exchange Group and Slaughter and May and which will be composed of stakeholders including investors, ESG data and ratings providers, and rated entities. The group will aim to meet for the first time later this year.

The group’s terms of reference can be found here.

Duncan Scott