FCA forms group to develop ESG code of conduct

The Financial Conduct Authority (FCA) has created a dedicated independent group to develop a voluntary code of conduct for ESG data ratings and providers. The group will be co-chaired by M&G, Moody’s, the London Stock Exchange Group and Slaughter and May it was announced last week.

Members of the group will include investors, ESG data and ratings providers, and rated entities, who’ll meet for the first time later this year, seeking to publish a draft of the code of conduct for consultation within around six months of the first meeting.

The final version of the code should be published around four months from the start of the consultation.

Prioritising transparency

The FCA said: “If the Treasury extends our regulatory perimeter, we committed to take the necessary steps to develop and consult on a proportionate and effective regulatory regime, with a focus on outcomes in areas highlighted in the International Organization of Securities Commissions’ (IOSCO) recommendations“.

The group responsible for the development of the code includes the International Capital Market Association and the International Regulatory Strategy Group (IRSG). The FCA says the appointment of the latter will ensure ‘an unbiased and balanced representation of all key stakeholder groups.’

The new code of conduct would ‘seek to be internationally consistent’ using four key outcomes based on IOSCO’s recommendations: Transparency, good governance, robust systems and controls and sound management of conflicts of interest.

In a bid to stamp out greenwashing the Financial Conduct Authority (FCA) recently proposed a package of new measures, including investment product sustainability labels and restrictions on how terms like ‘ESG’, ‘green’ or ‘sustainable’ can be used.

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