ESG Ratings consultation response submitted
Posted on: April 1st, 2026
The FCA’s ESG Ratings Consultation (CP25-34) closed yesterday.
I was unable to give the response the time it deserved, as I genuinely believe this is massively important, and believe the CP is positive and worthy of support – however I did eventually submit a few pages of comments just ahead of last night’s deadline.
Some of the main points I looked to make were:
- I have been concerned about ESG ratings agencies ability to distort markets and mislead / confuse clients for many years.
- SRI Services may be impacted by these rules as our SRI Styles might be viewed as ‘ratings’ – as the FCA’s definition includes ‘opinions’ and ‘classifications’ . (This does not overly bother me, however it might impact how we operate from 2027/8).
- The FCA is right to focus on transparency. The purpose of the various ratings services vary, and assets are dynamic and complex – so seeking ‘perfect data’ and or ‘perfect alignment of ratings’ is not realistic. Being open about methodologies and supporting clients better is however realistic, necessary and very ‘doable’.
- I am sceptical about the extent to which ‘trade secrets’ and ‘commercial sensitivities’ are real and encourage scepticism here. There may well be occasional when this is the case, but the line between these as ‘commercial interests’ (including the desire to save money) is easily blurred.
- Ratings agencies made a great deal of money fuelling the ESG boom, and whilst no one can be expected to have a crystal ball, their modus operandi was not always exemplary. Ratings agencies should now focus on ensuring ‘information black holes’ don’t appear between themselves and ultimate / end clients (individual investors). Relevant information should be able to be shared through the investment chain in order to improve trust, help advisers meet their Consumer Duty obligations and help clients make informed decisions.
- The regulator should say more about AI. It will be commonly used by ratings agencies. Inputs are likely to be dominated by information published by (SEO savvy) large corporates. The voice of those who are negatively impacted by corporate activity, such as indigenous populations, is far less likely to be found by AI scraping the web – and may therefore skew ratings.
- New rules need to ensure barriers to entry are not too high as this would benefit incumbents and be to the detriment of smaller and newer entrants to this market. (I have sought clarification on what costs might be incurred by businesses such as ourselves)
See FCA consultation link: