The Society of Pension Professionals (SPP) has responded to the current FCA consultation on ESG ratings.
The consultation seeks industry views on FCA proposals to regulate the ESG ratings market, with the aim of making ESG ratings more transparent, reliable and understandable.
The SPP response welcomes the FCA’s objective of enhancing transparency and providing robust reliable ratings and minimum disclosures for ESG rating providers. However, the SPP warn of possible practical challenges that will require further consideration including the impact on smaller providers, access to data as well as legal and governance concerns.
Amanda Cooke, Chair of the SPP’s Financial Services Regulation Committee, said;
“The SPP supports a proportionate approach to regulating ESG ratings, and welcomes the FCA’s focus on transparency and robust minimum disclosures without duplicating existing regulatory regimes.
However, whilst clearer disclosures on methodologies, fees and conflicts of interest will improve trust and comparability, implementation must be practical, especially for smaller providers, and key concepts like ‘material changes’ need sharper definition to avoid unnecessary cost and confusion. Getting that balance right is key to ensuring these proposals strengthen confidence in ESG ratings without stifling the market.”
The SPP consultation response can be read in full here.
