UK to regulate ESG ratings providers (2025)
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What’s the story? Britain’s Financial Conduct Authority (FCA) announced plans to bring ESG ratings providers under direct supervision.[1] The agency said the proposal is intended to increase transparency, standardize disclosures, and address concerns about conflicts of interest in the ratings market. The proposal follows legislation introduced in October to establish a framework for regulating ESG ratings providers.[2]
Under the proposal, providers would need to disclose conflicts, identify the factors they assess, describe their methodologies, and explain how they handle complaints.[3] Employees involved in producing ratings would be barred from trading the securities of companies they evaluate. The regime would take effect in June 2028, after an authorizations process beginning in 2027.
Why does it matter? The FCA’s proposal would introduce formal regulatory requirements for ESG ratings providers, including new expectations for transparency, conflict management, and disclosure. These standards would apply across a market that is widely used in financial decision-making but currently operates without direct supervision.
The plan would also determine which firms may continue providing ESG ratings in the UK, since providers would need FCA authorization to operate under the new system.
What’s the background? The process began in October, when the government introduced legislation to bring ESG ratings providers under FCA oversight.[4] Reuters reports that the EU is also developing its own approach to regulating ESG ratings providers, indicating parallel work in other jurisdictions.[5]
See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia’s ESG newsletter
External links
Footnotes
- ↑ Reuters, "Britain targets conflict-of-interest concerns in ESG rating rules", accessed December 10, 2025
- ↑ Financial Conduct Authority, "CP25/34: ESG Ratings Consultation Document", accessed December 10, 2025
- ↑ Hogan Lovells, "UK Proposals for the Regulation of ESG Ratings", accessed December 10, 2025
- ↑ LawNow, "UK Moves to Regulate ESG Ratings: Legislation Finalised", accessed December 10, 2025
- ↑ Reuters, "Britain targets conflict-of-interest concerns in ESG rating rules", accessed December 10, 2025
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