New FCA rules bring ESG rating providers into UK regulation for the first time

The new framework brings ESG rating providers into FCA regulation for the first time, covering a market that plays an important role in investment decisions. The rules are designed to improve the transparency, reliability and comparability of ESG ratings, helping build confidence in the information investors rely on.

The regime applies to firms or organisations providing ESG ratings and assessments to ensure reliability across the market. The FCA has published guidance to help firms understand whether they may be in scope.

Laura Dawes, director of authorisations and sustainable finance at the FCA, said:

‘Trusted information is essential for well-functioning markets. These rules will help improve transparency and raise standards across the ESG ratings market while supporting competition, innovation and growth.

‘Firms should check now whether they are in scope and start preparing for authorisation. We’ll continue to provide practical support to help them prepare.’

The new framework introduces requirements covering transparency, governance, systems and controls, the management of conflicts of interest, and engagement with users of ESG ratings and rated entities. It is designed to be proportionate to firms’ size and activities and is informed by international and existing standards.

Firms that may be in scope should start preparing now. ESG rating providers operating in the UK market will need to apply for FCA authorisation from 24 June 2027.

The FCA will provide webinars and access to its Pre-Application Support Service to help firms prepare.

Firms should now:

understand whether the framework could apply to their activities
review the final rules and guidance
consider whether they need FCA authorisation
start preparing for implementation
engage early with FCA support services