Amanda Cooke: Key concepts like ‘material changes’ need sharper definition to avoid unnecessary cost and confusion
The Society of Pension Professionals (SPP) has called on the Financial Conduct Authority (FCA) to give “further consideration” to its proposals on ESG ratings.
The trade body's response to the FCA consultation on ESG ratings welcomed the regulator's objective of enhancing transparency and providing robust reliable ratings and minimum disclosures for ESG rating providers.
But it warned of "possible practical challenges" that will require further consideration – including the impact on smaller providers, access to data as well as legal and governance concerns.
SPP financial services regulation committee chair Amanda Cooke said: "The SPP supports a proportionate approach to regulating ESG ratings, and welcomes the FCA's focus on transparency and robust minimum disclosures without duplicating existing regulatory regimes.
"However, whilst clearer disclosures on methodologies, fees and conflicts of interest will improve trust and comparability, implementation must be practical, especially for smaller providers, and key concepts like ‘material changes' need sharper definition to avoid unnecessary cost and confusion. Getting that balance right is key to ensuring these proposals strengthen confidence in ESG ratings without stifling the market."
