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ARTICLE · 20 JULY 2023

Regulation For ESG Ratings Agencies Gathers Pace

K&L Gates
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With increased demand for "ESG friendly" investments (in an ESG investment market on track to exceed US $53 trillion globally by 2025), asset managers, funds management companies...

European UnionFinance and Banking
Jim Bulling
Jim Bulling

With increased demand for "ESG friendly" investments (in an ESG investment market on track to exceed US $53 trillion globally by 2025), asset managers, funds management companies, superannuation funds and other investors are actively turning to ESG ratings agencies to guide their decisions.

As it currently stands, there is significant potential for discrepancy in the ratings being produced. This is confusing and potentially misleading for investors and may also divert capital away from its intended direction.

Regulation can improve standards of quality, reliability and comparability of ESG ratings and on 7 November 2022, the International Organisation of Securities Commissions (IOSCO) published a call for action to ensure investors have access to internationally consistent and comparable sustainability-related information from ESG ratings providers.

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