UK advisory body the International Regulatory Strategy Group (IRSG) has launched a voluntary code of conduct for environmental, social and governance (ESG) ratings and data product providers.
IRSG Council interim co-chair Chris Hayward said the provisional code “will support investor confidence in ESG ratings and data to unlock capital for the urgent net zero transition.”
“A comprehensive, proportionate and globally consistent voluntary code of conduct for ESG ratings and data will help ensure this market is fit for purpose, in turn supporting market practitioners to assess the risks more accurately,” he added.
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The code aims to enhance consistency, transparency and accountability in the financial services industry to ensure that the market can be confident in the integrity of ratings and data products through enhanced systems, processes and controls.
Principles of the code include:
- Good governance – ratings and data products providers ensure appropriate governance arrangements are in place including transparency and conflict management.
- Systems and controls – implementing written policies and procedures to ensure a high quality of products, consistency and effective engagement practices.
- Conflicts of interest – ESG ratings and data products providers manage activities that may compromise the independence and objectivity of ratings and operations.
- Transparency – adequate levels of public disclosure and transparency as a priority for ESG ratings and data products including methodologies and processes.
The provisional code of conduct is the first of its kind. It has been launched by the ESG Data and Ratings Code of Conduct Working Group (DRWG) and supported by the International Capital Market Association (ICMA).
