Britain’s finance ministry said it will introduce regulation for providers of environmental, social and governance (ESG) ratings on companies to improve clarity and trust in benchmarks widely used to steer investments, but gave no specific timeline.
Trillions of dollars globally have flowed into company shares, with asset managers using ESG ratings to help pick stocks. The activity of compiling ESG ratings, a sector that includes providers such as MSCI, S&P, Morningstar, London Stock Exchange Group and others, is unregulated. The European Union approved its first mandatory rules last month to regulate ESG ratings, going further than Britain’s voluntary industry code, though both sets of norms are based on guidance from IOSCO, a global securities regulatory body.
