New Law to Regulate Green Investment Ratings Providers

The Chancellor, Rachel Reeves has confirmed plans for the government to introduce a new law to regulate ESG ratings providers.

ESG stands for Environmentally friendly, Socially responsible, and corporate Governance, in simple terms sustainably, socially responsible and ‘green’ investing.

Greenwashing:  There has been a high incidence of firms claiming to be greener than they are or making greater progress/step changes to be so.  This is ‘greenwashing’.

Comment

ESG ratings providers are currently unregulated and given the size of the ESG investment market, now it is £trillions, it is time to set uniform industry standards as to what areas are good, bad and indifferent for climate action rather than each ESG ratings provider setting its own standards.

Uniform ratings standards will give better clarity to the fund management industry when fund managers select firms to invest in as well as the consumer having benchmarks that they can trust. The regulator will set standards for:

• Internal company actions, targets achieved and improvement on climate action.
• Measurement of the actual impact and improvement in reduced impact for the environment.