INTERNATIONAL: IOSCO calls for oversight of ESG Ratings and Data Product Providers

Tuesday November 23 2021

The Board of the International Organization of Securities Commissions (IOSCO) today has published a set of recommendations applicable to ESG Ratings and Data Product Providers.

The market for ESG ratings and data has grown over the past few years, in part due to a lack of consistent information disclosures at the entity level. As this market does not typically fall within the remit of securities regulators, IOSCO suggests that regulators could consider focusing greater attention on the use of ESG ratings and data products and the activities of ESG rating and data products providers in their jurisdictions. This could help to increase trust in ESG ratings and data going forward.

IOSCO has also set out specific recommendations on what regulators could consider when developing their framework. These recommendations are underpinned by more specific guidance to assist members when navigating this new market.

The recommendations include promoting more transparency regarding the methodologies that ESG ratings and data product providers use in developing their products; ensuring their procedures for managing conflicts of interest are appropriate and improving communication channels between providers and the entities covered by their ESG ratings or data products without undermining their impartiality.

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