The ESG Data and Ratings Working Group (DRWG) has released a consultation paper to develop a Code of Conduct for ESG Ratings and Data Product Providers.
Titled a Draft Voluntary Code of Conduct for ESG Ratings and Data Product Providers, this code responds to demands for tighter oversight regarding the quality, reliability and transparency of ESG ratings and data products.
This recognises the growing importance that ratings agents and data providers are playing in the investment process as commitment to ESG principles and standards becomes more prominent.
To support this process, the UK Financial Conduct Authority appointed the International Capital Markets Association and the International Regulatory Strategy Group (IRSG) to provide a secretariat for this working group in November 2022.
The DRWG is chaired by institutional asset manager M&G and ratings agency Moody’s, with London Stock Exchange Group and law firm Slaughter and May serving as vice chairs. This is represented by a wide range of industry participants, including asset owners and investment managers, banks and corporate entities, along with non-government agencies and academic staff.
The working group has asked relevant stakeholders to provide their feedback on the consultation paper by 5 November 2023.
Commenting on this initiative, ICMA deputy CEO and head of sustainable finance Nicholas Pfaff says: "ESG ratings and data products are essential resources for the sustainable finance market. ICMA actively supports this important industry-led initiative by jointly providing the Secretariat."
FCA director of ESG Sacha Sadan adds: "Today is an important step in increasing transparency and trust in the growing market for ESG data and ratings products.
“It is also vital that the Code has been developed with international consistency in mind. We thank the Secretariat for their hard work and encourage everyone to take part in the consultation."
The DRWG steering committee issued the following statement: "Members of the DRWG have worked hard to make sure the Code of Conduct is internationally consistent, primarily through close alignment with the International Organisation of Securities Commissions' (IOSCO’s) recommendations, but also through taking into account developments in jurisdictions such as Japan, Singapore and the EU.
“We hope the Code of Conduct will be a significant step in the development of consistent global standards for ESG ratings and data product providers."
