ESG: UK regulation on ESG ratings providers - a client note

In November 2024, the UK Government announced the latest iteration of its proposals to regulate the provision of ESG ratings in the UK. 

This is relevant both to firms which provide ESG ratings as a standalone business, and also firms which provide ESG ratings as part of other products or services, including asset managers. 

Our client briefing note (see below) summarises the Top 10 things that providers of ESG ratings need to know about these important new proposals. 

What's the context for these proposals?

ESG ratings are not currently subject to any specific regulatory regime in the UK.  The Government believes that bringing ESG ratings within the scope of the UK financial services regulatory perimeter will boost investor confidence, reduce greenwashing, and address a perceived lack of transparency in relation to ESG ratings.

Following its Spring 2023 consultation on proposals to regulate the providers of ESG ratings, in November 2024, the Government published its consultation response, setting out the contours of the future regulatory regime for ESG rating providers. 

The Government also published a draft statutory instrument (SI), proposing amendments to UK financial services laws, to give effect to the new regulatory regime.

Technical feedback from the industry on the draft SI should be provided by 14 January 2025.