Future regulatory regime for Environmental, Social and Governance - working group member

Future regulatory regime for Environment, Social and Governance
(ESG ratings providers - responding to HM Treasury)

Purpose and Responsibility 

HMT recently published a consultation paper seeking input on whether and how government might best draft primary legislation in order to expand the regulatory perimeter to include ESG rating providers and allow the FCA to regulate the activity effectively to protect UK users.

CFA UK wishes to convene a working group of up to 8 volunteers to respond to this consultation.
The group will need to address questions like whether/how:

• the regulation should affect ratings provided to UK-based users by firms based overseas; 
• ESG data providers not providing an ESG assessment should be carved out from regulation;
• firms that produce internal ratings should be allowed to sell them without being regulated;
• overseas firms that produce inter-group internal ratings should be able to pass them onto their UK branch or subsidiary without them being regulated;
• issuer paid ESG ratings should be exempt as they are free to the user;
• credit rating agency reports and credit/equity research containing ESG assessments should be caught under the regulation; 
• there should be an exemption for small firm providers of ESG ratings and, if so, by what criteria ratings providers should be identified and defined as ‘small’;
• could the regulation prevent unregulated ESG ratings finding their way to UK users through intermediaries.

The purpose and activity of this group is to:

• survey CFA UK members and author a letter to respond to the HMT's consultation.

Who are we looking for:

• members currently using or providing ESG ratings in their professional work
• availability for up to 15 hours (2.5hrs/week for 6 weeks).

What you will gain:

• influence the developments of regulation of the ESG ratings sector
• network building
• acknowledgement of your personal contribution in the letter to HM Treasury and publicly in LinkedIn and on the professionalism page of the CFA website
• opportunity to present your findings to CFA UK’s Professionalism Steering Committee.

Compliance notes:

• members should seek prior compliance clearance from their employers in advance of participating
• members will participate in a personal capacity and not as representatives of their employer.

​