Future regulatory regime for Environmental, Social, and Governance (ESG) ratings providers
As announced by Chancellor of the Exchequer Jeremy Hunt at Spring Budget 2024, the government will regulate the provision of ESG Ratings, where these assessments of ESG factors are used for investment decisions and influence capital allocation. This will improve clarity and trust in ESG ratings. A full consultation response and legislative steps will follow later this year.
Environmental, Social, and Governance (ESG) ratings are assessments of ESG matters, which increasingly drive investment decisions in financial markets. As part of the Edinburgh reforms in December 2022, Chancellor Jeremy Hunt announced that the government wants to ensure improved transparency and good conduct in the ESG ratings market, and that HM Treasury will consult on a potential regulatory regime for their providers. This consultation paper sets out proposals for the scope of such a regulatory regime. The consultation opens on 30 March 2023 and will close on 30 June 2023. Responses will inform the government’s next steps. Please submit your responses to ESGRatingsConsultation@hmtreasury.gov.uk.