UK Brings ESG Ratings Providers Under Regulation

The Financial Conduct Authority (FCA), the UK’s conduct regulator for financial services firms and financial markets, announced the finalized publication of a series of new transparency, governance and conflict of interest management requirements for ESG ratings providers.

The new requirements bring ESG ratings providers under UK regulatory supervision for the first time. Under the new regime, which takes effect in June 2028, firms providing ESG ratings in the UK will need FCA authorization.

The new framework follows the finalization of new legislation in October 2025 by the UK government to regulate ESG ratings providers, under the supervision of the FCA. The law applies to UK-based providers, as well as foreign providers offering ESG ratings in the UK. The FCA launched its initial proposed rules to regulate ESG ratings providers in late 2025.

According to the FCA, the new rules are aimed at making ESG ratings more transparent, reliable and comparable, while supporting investors’ decision-making and market confidence and enabling growth in sustainable finance. The FCA said that its approach is shaped by international standards, including the recommendations of international securities regulator standards setter IOSCO, and also draws on the International Capital Market Association (ICMA) Code of Conduct for ESG ratings and data products providers.

The new framework introduces requirements covering areas including transparency, governance, systems and controls, the management of conflicts of interest, and engagement with users of ESG ratings and rated entities.

New transparency requirements for ESG ratings providers under the new system include public disclosures about their products, including methodologies, objective, coverage and rated universe, as well as data approach, limitations and engagement approach, alongside additional disclosures to users, and to rated entities upon request, about products and individual ratings. Providers are also required to provide users with advance notification of material methodology changes, and to provide rated entities with advance notification of new ratings, and upon request of additional detailed information.

Governance-related requirements include obligations to have robust governance arrangements proportionate to size and complexity, keep full operational responsibility over the ESG ratings process, including outsourced functions, have an appropriate UK presence to support effective oversight and accountability, implement systems and controls that ensure ratings are based on up‑to‑date information and consistently apply methodologies, establish appropriate quality assurance processes and maintain internal records, and to ensure that personnel producing ESG ratings are competent, professional and act with integrity.

The new regulations also require providers to identify prevent, manage and disclose conflicts of interest, maintain effective complaints policies and procedures, have effective policies in place to ensure effective quality assurance, data validation and methodology reviews, and to retain records explaining how ESG ratings have been produced and how ratings outcomes have been reached.

The FCA said that it will open applications for ESG ratings providers to become authorized beginning in June 2027.

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.”

Click here to access the new ESG ratings regulation framework.