Finance
Britain targets conflict-of-interest concerns in ESG rating rules
Published by Global Banking and Finance Review
Posted on December 1, 2025
1 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on December 1, 2025
1 min readLast updated: January 20, 2026
The UK's FCA plans to regulate ESG rating providers to address conflicts of interest and improve transparency, with new rules effective by 2028.
LONDON, Dec 1 (Reuters) - Britain’s financial regulator on Monday set out plans to bring companies that provide environmental, social and governance (ESG) ratings under its oversight, vowing to tackle conflict-of-interest concerns and improve transparency.
The Financial Conduct Authority wants ratings providers to disclose possible conflicts of interest such as when they are both assessing companies' ESG credentials and simultaneously advising them on how to improve. The regulator also wants providers to make clear which ESG factors they assess and to publish details of how they handle complaints.
The industry for ESG ratings, currently subject to a voluntary code of conduct, has boomed in recent years. But trust in the ratings has been varied, with many investors worried about opaque rating methodologies and about companies' green credentials being inflated.
Finance Minister Rachel Reeves wants to cement Britain as a world leader in sustainable finance, including by addressing the lack of transparency behind ESG ratings.
After a four-month consultation on the FCA's plans, the regulator said on Monday the rules would eventually come into force in June 2028.
(Reporting by Phoebe Seers; Editing by Tommy Reggiori Wilkes)
ESG stands for Environmental, Social, and Governance, which are criteria used to evaluate a company's ethical impact and sustainability practices.
Financial regulation refers to the laws and rules governing financial institutions to maintain market integrity and protect consumers.
A conflict of interest occurs when an individual or organization has competing interests or loyalties that could potentially influence their decisions.
Transparency in finance means providing clear, accessible information about financial activities, enabling stakeholders to make informed decisions.
An ESG rating assesses a company's performance on environmental, social, and governance factors, helping investors evaluate its sustainability.
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