UKSIF comment on HMT ESG Ratings consultation

“We are supportive of both the government and FCA’s initiatives exploring new measures for ESG ratings and data providers, which is becoming increasingly important as ESG data becomes more embedded in firms’ investment decisions. There is a good case for this group to be brought within the UK’s ‘regulatory perimeter’ in time, and we look forward to continue working closely with policymakers in this area over the coming months.

Some of the key priorities we see for this work include: enhancing transparency over providers’ methodologies used to calculate ratings, promoting ‘best practice’ standards, addressing conflicts of interest, and considering guidance for investors and other users on the use of third-party data. Broadly speaking, transparency should be a core objective for the new rules, rather than seeking greater convergence between providers’ ratings. Separately to this, government also needs to markedly strengthen corporate disclosures given that providers rely heavily on these disclosures to undertake their data analyses.” —James Alexander, Chief Executive, UK Sustainable Investment and Finance Association (UKSIF)