UK publishes ESG ratings rules after ‘extensive EU engagement’

illuminem summarises for you the essential news of the day, reviewed by our editorial team. Read the full piece on Responsible Investor or enjoy below:

🗞️ Driving the news: The UK has published new rules regulating ESG ratings providers, introducing mandatory regulatory authorisation and a framework designed to strengthen oversight of sustainability assessments
• Providers would be required to apply for authorisation by June 2027, with the new regime expected to take effect in June 2028

🔭 The context: The rules follow extensive engagement with the EU, reflecting the growing importance of consistency and transparency in sustainable finance regulation
• ESG ratings influence how investors assess companies' environmental, social and governance performance, but differences in methodologies and data can make assessments difficult to compare
• Regulatory oversight aims to improve accountability and confidence in these ratings.

🌍 Why it matters for the planet: More transparent and reliable ESG ratings can help investors better evaluate companies' environmental performance and sustainability risks
• Stronger oversight may also reduce greenwashing risks and improve the credibility of information used to direct capital towards sustainable activities

⏭️ What’s next: ESG ratings providers operating in the UK will need to prepare for authorisation ahead of the June 2027 deadline
• The framework is scheduled to apply from June 2028, giving firms a transition period to adapt their governance, methodologies and compliance processes

📈 One stat: The UK’s new ESG ratings regime is scheduled to take effect in June 2028

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