This post was originally published on fca.org.uk
The new framework brings ESG rating providers into FCA regulation for the first time, covering a market that plays an important role in investment decisions. The rules are designed to improve the transparency, reliability and comparability of ESG ratings, helping build confidence in the information investors rely on.
The regime applies to firms or organisations providing ESG ratings and assessments to ensure reliability across the market. The FCA has published guidance to help firms understand whether they may be in scope.
Laura Dawes, director of authorisations and sustainable finance at the FCA, said:
‘Trusted information is essential for well-functioning markets. These rules will help improve transparency and raise standards across the ESG ratings market while supporting competition, innovation and growth.
‘Firms should check now whether they are in scope and start preparing for authorisation. We’ll continue to provide practical support to help them prepare.’
The new framework introduces requirements covering transparency, governance, systems and controls, the management of conflicts of interest, and engagement with users of ESG ratings and rated entities. It is designed to be proportionate to firms’ size and activities and is informed by international and existing standards.
Firms that may be in scope should start preparing now. ESG rating providers operating in the UK market will need to apply for FCA authorisation from 24 June 2027.
The FCA will provide webinars and access to its Pre-Application Support Service to help firms prepare.
Firms should now:
- understand whether the framework could apply to their activities
- review the final rules and guidance
- consider whether they need FCA authorisation
- start preparing for implementation
- engage early with FCA support services
Notes to editors
- Read the FCA’s Policy Statement and final rules, PS26/22, ‘ESG ratings: final regime’.
- The new framework takes effect on 29 June 2028. From that date, firms providing ESG ratings in the UK will need FCA authorisation and to have the relevant permission before carrying on that activity, unless an exemption applies.
- ESG rating providers operating in the UK market will need to apply for FCA authorisation from 24 June 2027. We are staggering application periods and encourage firms to apply as early as possible within their window.
- ESG ratings generally assess how companies or other entities, assets, or financial products perform against environmental, social and governance criteria. They are used by asset managers, lenders, benchmark administrators and others to inform capital allocation decisions and manage risk, among other uses.
- The approach is shaped by international standards, including recommendations from the International Organization of Securities Commissions (IOSCO).
- The final rules follow the FCA’s consultation, CP25/34, which opened on 1 December 2025 and closed on 31 March 2026.
- The regulatory framework follows government legislation bringing the provision of ESG ratings within the FCA’s remit in October 2025. 95% of respondents to the government’s consultation supported the move.
- The regime regulates how ESG ratings are produced, governed and communicated. It does not prescribe a particular sustainability view or methodology.
- There is strong investor demand for ESG information. The FCA’s Financial Lives Survey 2024 found 72% of adults with investments or a defined contribution pension wanted their investments to do some good as well as provide a financial return.
