The UK’s Financial Conduct Authority (FCA) has released a consultation outlining new rules to regulate ESG (environmental, social, governance) ratings providers. The proposed framework aims to strengthen transparency, improve governance standards, and reduce conflicts of interest within the rapidly expanding ESG-ratings industry.

Under the new proposals, providers would be required to publicly disclose key information on their methodologies, including data sources, ESG factors assessed, rating scales, and whether assessments are absolute or peer-relative. The goal is to help investors better understand how ratings are constructed and allow for easier comparison across providers.

The rules also introduce governance and operational requirements, such as maintaining strong internal controls, consistent application of methodologies, and regular data-quality reviews. Providers offering ESG ratings in the UK would need to have a local presence to ensure effective supervision and accountability.

Conflict-of-interest management is another major priority. Providers must identify, manage, and document any potential conflicts — including cases where rating providers offer consulting or other services to the same companies they rate.

Additional provisions include stakeholder engagement processes, advance notification of ratings to entities being assessed, and established channels for handling complaints and data-correction requests.

The consultation is open until 31 March 2026, with a final policy statement expected in Q4 2026. If adopted, the new regulatory framework would take effect from 29 June 2028 — marking a major step toward improving trust and reliability in ESG-related investment insights.