The government will regulate ESG ratings, it confirmed in Wednesday’s Budget (March 6).
It comes a year after the Treasury launched a consultation into whether environmental, social and governance ratings providers should be regulated.
The Spring Budget read: “The government will regulate providers of environmental, social and governance ratings to users within the UK.
“ESG ratings providers will be brought into the regulatory perimeter of the Financial Conduct Authority.”
Since the Budget documents were published, a holding update was issued by the Treasury.
It said its response to the consultation and legislative timeline for the updates will follow.
The proposals were first put forward in March 2023 as part of the government's green finance strategy.
It set out the rules would apply to ESG ratings providers and not those who provide the data.
In December, the International Capital Market Association and the International Regulatory Strategy Group launched a voluntary code of conduct for ESG ratings and data products providers.
The move was welcomed by the FCA's director of ESG Sacha Sadan, who said: "As part of the FCA ESG Strategy, we committed to using our voice and influence to promote globally aligned solutions where possible."
At the time, Sadan said the FCA was working with the government on the next steps of the regulator taking on responsibility for the oversight of ESG ratings providers.
tara.o'connor@ft.com
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