Written by Zhuan Faraj

On 23 November 2021, the International Organization of Securities Commissions (“IOSCO”) published its final report on ESG ratings and data products providers.

This report follows a consultation issued in July 2021 which sought to better understand the implications of the increasingly important role of ESG ratings and data products for financial markets. IOSCO received 61 responses to its consultation, who were overall supportive of IOSCO’s work and broadly in agreement with the proposed recommendations.

The final report sets out ten recommendations, encompassing the following:

• Regulators could consider focusing greater attention on the use of ESG ratings and data products and the activities of ESG rating and data products providers in their jurisdictions.
• ESG ratings and data products providers could consider a number of factors related to issuing high quality ratings and data products, including publicly disclosed data sources, defined methodologies, management of conflicts of interest, high levels of transparency, and handling confidential information.
• Users of ESG ratings and data products could consider conducting due diligence on the ESG ratings and data products that they use within their internal processes.
• Suggestions that ESG ratings and data products providers (and entities subject to assessment by ESG ratings and data products providers) could consider to improve information gathering processes, disclosures and communication between providers and entities subject to assessment.

The final report can be read in full here.

For an overview of Burges Salmon’s work in Sustainable Finance and relevant contacts, see here.