The International Capital Market Association (ICMA) published a new, globally consistent, voluntary Code of Conduct for ESG ratings and data products providers on 14 December 2023.
A copy of the Code can be found here.
In line with recommendations by the International Organization of Securities Commissions (IOSCO), the Code focuses on promoting transparency, good governance, management of conflicts of interest, and strengthening systems and controls in the sector. As such, it is intended to be internationally interoperable and could be used by jurisdictions where no local Code or regulation is in place.
Following a report released by IOSCO in November 2021, in 2022 the FCA appointed ICMA and the International Regulatory Strategy Group (IRSG) to convene an industry group to develop a globally consistent voluntary Code under a joint Secretariat. An initial draft of the Code was published on 5 July 2023, which was then followed by a 3-month consultation period that ended on 5 October 2023. With publication of the final Code today, ICMA will assume ownership going forward.
Announcing the launch of the Code, Nicholas Pfaff, Deputy CEO and Head of Sustainable Finance at ICMA commented, “Today’s launch marks an important step in further promoting internationally consistent standards across sustainable finance. In the growing market for ESG ratings and data products, the Code will be vital for increasing transparency and trust. We thank the industry-led working group for their hard work and encourage all ESG ratings and data products providers to sign up to the Code.”
The Steering Committee said, “Members of the ESG Data and Ratings Working Group (DRWG) have sought to ensure that the Code of Conduct is internationally consistent, primarily by basing the Code of Conduct on IOSCO’s recommendations. The members also sought to bear in mind, in developing the Code, related developments in jurisdictions such as Japan, the EU, Singapore, and Hong Kong. We hope this Code of Conduct can provide an international model and play a role in helping to ensure consistent global standards for ESG ratings and data products providers.”
Sacha Sadan, FCA Director of Environmental, Social and Governance, said, “As part of the FCA ESG Strategy, we committed to using our voice and influence to promote globally aligned solutions where possible. With its strong focus on international consistency, this industry-owned Code will play a key role in increasing transparency and trust in the ESG data and ratings market. We encourage all ESG data and ratings providers to engage with and sign up to the Code.”
On 31 January 2024 a hybrid event will be held at London Stock Exchange where we will bring together various stakeholders to discuss how the Code will work in practice and in an international context. A registration link will be posted on LinkedIn and the ICMA website in due course.