FCA sets out proposals to make ESG ratings transparent, reliable and comparable

The move is estimated to deliver around £500m in net benefits over the next decade.

ESG ratings inform investment decisions, risk management and regulatory reporting. Global spending on ESG data, including ratings, is projected to reach $2.2bn in 2025. 

These proposals follow the decision by the government to bring ESG ratings within the FCA’s remit, supported by 95% of those who responded to its consultation. Introducing clear, proportionate rules for transparency and governance will help to build the market’s trust in ESG ratings and address concerns. 

The FCA’s research shows around half of those who use ESG ratings are worried about how they are built (55%) and how transparent they are (48%). The proposals aim to address this and focus on 4 areas:

• Increased transparency – allowing easier comparisons for the benefit of both those who use ratings and those who are rated.
• Improved governance, systems and controls – to ensure clear decision-making and strong oversight and quality assurance.
• Identification and management of conflicts of interest.
• Setting clear expectations for stakeholder engagement and complaints handling.

There are also proposals on applying existing FCA rules to firms coming into the FCA’s remit. The proposed rules are designed to be proportionate to business size and risk. 

Strengthened market trust through proportionate oversight benefits business. This will reinforce the UK’s reputation as a global sustainable finance hub, supporting innovation and continued growth. It will also support the government’s commitment to sustainable finance in its industrial strategy. 

Sacha Sadan, director of sustainable finance at the FCA, said:

'Our proposals will give those who use ESG ratings greater trust and confidence – supporting our goal of increasing trust and transparency in sustainable finance.

'This will enhance the UK’s reputation as a global sustainable finance hub – attracting investment and supporting growth and innovation.'

The proposals draw on the existing voluntary industry code of conduct and International Organization of Securities Commissions (IOSCO) recommendations to support consistency and international competitiveness.

The FCA welcomes feedback on the proposals – the consultation is open until 31 March 2026.

Final rules are expected in Q4 2026, with the new regime coming into effect from June 2028. The FCA will provide support for those firms wishing to become authorised as an ESG rating provider. 

Notes to editors

1. Read the consultation[1].
2. Read the Research Note[2].
3. ESG ratings are evaluations of a company, product or fund’s performance across environmental, social and governance factors.  
4. This follows the Government’s decision to bring ESG ratings within the FCA’s remit, as set out in legislation published in October 2025.
5. The FCA proposals are aligned with international standards, including International Organisation of Securities Commissions (IOSCO) recommendations[3] and the industry-led ICMA Code of Conduct[4].
6. Our net benefit statistic and the underlying analysis, assumptions and methodologies can be found in our cost-benefit analysis (CBA).