Britain’s Financial Conduct Authority (FCA) has finalized rules for environmental, social and governance (ESG) ratings, bringing covered providers under its supervision in 2028 to give investors clearer information.
Announced Nov. 3, the rules require firms within their scope to secure authorization from June 29, 2028, unless an exemption applies. The FCA plans to stagger the periods during which firms can apply.
Who must apply depends partly on how a rating is created and used. The statutory order defines an ESG rating as an assessment developed through an established method and a defined system for ranking subjects. The regime applies to ratings likely to influence a decision to make a specified investment when the same provider produces the rating and makes it available. Some activities are excluded, so the rules do not cover every ESG assessment.
The FCA’s framework addresses what providers disclose, how they govern themselves and maintain internal controls, how they handle conflicts of interest, and how they engage with ratings users and rated entities. It governs the production and communication of ratings without prescribing a sustainability judgment or a particular rating method.
Asset managers, lenders and benchmark administrators use ESG ratings when weighing investments and risks. The Treasury raised concerns about ratings transparency, providers’ governance and internal controls, and potential conflicts of interest. Its 2023 consultation drew 94 responses; 95% of respondents favored regulatory oversight.
Covered providers face one-off and ongoing costs, according to the Treasury’s explanatory memorandum. The policy is intended to give investors and other ratings users clearer information, though the memorandum does not quantify the cost of the final FCA rules. “Trusted information is essential for well-functioning markets,” said Laura Dawes, the FCA’s director of authorisations and sustainable finance.
The statutory order was made Dec. 15, 2025, and the FCA published proposed rules that December. Applications open June 24, 2027.
