The Financial Conduct Authority has unveiled its proposals to make environmental, social and governance ratings more transparent, reliable and comparable. The regulator expects the measures to deliver about £500m in net benefits over the next decade as ESG assessments become increasingly central to investment decisions, risk management and reporting.

The plans follow the UK Government’s move to bring ESG ratings under the watchdog’s remit, supported by 95% of consultation respondents. FCA research shows 55% of users are concerned about how ratings are built, and 48% about the transparency behind them.

The proposals focus on improving transparency for easier comparisons, strengthening governance and oversight, managing conflicts of interest and clarifying expectations on engagement and complaints handling. Existing FCA rules would be applied proportionately to firms coming into scope.

Sacha Sadan, director of sustainable finance at the FCA, said: “Our proposals will give those who use ESG ratings greater trust and confidence – supporting our goal of increasing trust and transparency in sustainable finance. This will enhance the UK’s reputation as a global sustainable finance hub – attracting investment and supporting growth and innovation.”

The consultation, which draws on the industry code of conduct and IOSCO recommendations, is open until 31st March 2026. Final rules are due in late 2026, with the regime starting in June 2028.

Global spending on ESG data is projected to reach £2.2bn in 2025.

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