Consultation outcome

Future regulatory regime for Environmental, Social, and Governance (ESG) ratings providers

From:: HM Treasury
Published: 30 March 2023
Last updated: 14 November 2024 — See all updates

Read the full outcome

Consultation Response

Ref: ISBN 978-1-917151-64-1

PDF, 568 KB, 63 pages

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Draft Statutory Instrument: The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 2) Order 2024

PDF, 289 KB, 7 pages

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Detail of outcome

The consultation response sets out the details of the scope of the regulatory regime, including what activities will be captured, and this is then translated into draft legislation. The government will finalise the legislation next year and the FCA will then consult on the specific requirements.

The draft legislation “Statutory Instrument - The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 2) Order 2024” accompanies the government’s consultation response on a future regulatory regime for Environmental, Social, and Governance (ESG) ratings providers.

The government welcomes technical comments on the draft regulation by 14 January 2025.

Original consultation

Summary

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.

This consultation ran from
9am on 30 March 2023 to 11:59pm on 30 June 2023

Consultation description

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.

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