New UK regulation of ESG rating providers - Top 10 things

December 2025 has seen a flurry of developments on the UK regulation of ESG ratings. The UK Government finalised the legal instrument which will newly regulate the provision of ESG ratings in the UK (the ESG Ratings Order), and the FCA published its proposed rules and guidance for regulating ESG rating providers.

The ESG Ratings Order creates a new UK regulated activity of providing ESG ratings. Firms falling within scope of the new regulated activity will need to be FCA authorised to carry on this activity by 29 June 2028. 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.
However, there is an extensive range of exemptions and scoping provisions, which reduce the headline application:

• The ESG Ratings Order applies only to firms which both produce and make available ESG ratings. It does not apply to firms which merely distribute ratings that have been produced by a third party.
• There is a helpful exemption available for providing ESG ratings as part of a FCA regulated service. There is a similar exemption available for non-UK firms which market certain funds into the UK.

We expect that these exemptions will remove from scope the vast majority of asset managers and investment firms, which simply provide ESG ratings as an incidental part of another business. On the other hand, ESG rating providers which are in-scope of the new regulated activity will be subject to a detailed new FCA regulatory regime.

Firms will now need to engage with the new rules, and scope their application and availability of any exemptions. Simmons & Simmons stands ready to help.