EUROPEAN DEVELOPMENTS IN ESG
The Financial Conduct Authority has announced the formation of a group to develop a voluntary Code of Conduct for ESG data and ratings providers. The group will focus on outcomes highlighted in the International Organization of Securities Commissions’ (IOSCO) recommendations. These include transparency, good governance, management of conflicts of interest, and systems and controls. The Code will seek to be internationally consistent.
The International Capital Market Association (ICMA) and the International Regulatory Strategy Group (IRSG) will act as the Secretariat leading this work. The group will be composed of stakeholders including investors, ESG data and ratings providers, and rated entities.
At the same time, the European Securities and Markets Authority (ESMA) is seeking input on draft guidelines on the use in funds’ names of ESG or sustainability-related terms. “The objective is to ensure that investors are protected against unsubstantiated or exaggerated sustainability claims while providing both [National Competent Authorities] NCAs and asset managers with clear and measurable criteria to assess names of funds including ESG or sustainability-related terms.” The consultation paper is available here.