UK regulator sets rules for ESG ratings providers

The UK’s Financial Conduct Authority has set new rules for ESG ratings used to assess companies’ environmental, social and governance practices.

The rules cover ratings providers, users such as asset managers, rated companies and trade associations.

They require covered firms to address transparency, governance, conflicts of interest, stakeholder engagement and complaints.

The FCA says the aim is to make ratings more transparent, reliable and comparable so investors can make better-informed decisions.

The number of companies assessed by ESG rating frameworks has grown by 167% over the past few years.

Firms must check whether the rules apply to them and, if so, seek FCA authorisation.

Applications open on 24 June 2027, with support for firms preparing from February 2027.

The framework takes full effect on 29 June 2028.