The association noted that regulators could provide market participants with much-needed additional trust in ESG ratings and data.
By Paul A. Davies, Nicola Higgs, Michael D. Green, James Bee, and Anne Mainwaring
On 23 November 2021, the International Organization of Securities Commissions (IOSCO) published a report and set of recommendations (Recommendations) in relation to the providers of environmental, social, and governance (ESG) ratings and data products. The Recommendations come as the market for ESG ratings and data products has grown considerably over recent years, largely as a result of the increasing demands of investors to obtain reliable and comparable ESG-related data on companies. The Recommendations follow on from a consultation that IOSCO issued in July 2021 (for more information, see this Latham blog post), and include a summary of the feedback that was received in relation to the consultation as an Annex.
IOSCO recognised that the area of ESG ratings and data product providers is not one that securities regulators would ordinarily be concerned with. However, given the rapidly expanding role these providers have within global securities markets, IOSCO noted that the involvement of regulators could provide market participants with much-needed additional trust in ESG ratings and data.
As 2020 draws to a close, it is clear that standard-setters have made significant progress in harmonising environmental, social, and governance (ESG) disclosure frameworks. The launch of new initiatives in recent months shows that stakeholders recognise both the value of streamlining ESG disclosures and the importance of consolidating such disclosures as soon as possible. Organisations are also keenly monitoring developments. For example, the Basel Committee on Banking Supervision is actively tracking the initiatives outlined below in an effort to leverage its work and facilitate information-sharing across parallel initiatives.
On September 22, 2020, the International Business Council (IBC) of the World Economic Forum (WEF), in collaboration with Deloitte, EY, KPMG, and PwC, published a white paper,