Featured Product

    IOSCO Guides on Oversight of ESG Ratings and Data Product Providers

    November 23, 2021

    The Board of the International Organization of Securities Commissions (IOSCO) published a report that sets out recommendations applicable to Environmental, Social and Governance (ESG) ratings and data product providers. 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.

    The report begins with an overview of the market for ESG ratings and data products. It then discusses the current practices of ESG ratings and data products providers and presents observations in relation to users of ESG ratings and ESG data products while elaborating on the interactions between companies that are the subject of ESG ratings or data products and ESG ratings and data products providers. Finally, the report discusses areas for improvement highlighted in the fact-finding exercise of IOSCO and sets out recommendations for securities markets regulators, ESG ratings and data products providers, users of these products and services, and companies subject to the review of these providers. The suggested improvement areas include reliability of raw ESG data,  transparency around ESG ratings methodology and ESG data products, reliability of ESG ratings and data products and potential conflicts of interest, and communication between ESG ratings and data products providers and entities.

    After considering the identified improvement areas, IOSCO has 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. In its report, IOSCO provides recommendations on the possible regulatory and supervisory approaches, the internal processes of ESG ratings and data products providers, the use of ESG ratings and data products, and the interactions of ESG ratings and data products providers with entities subject to assessment by ESG ratings and data products providers. IOSCO specifies that ESG ratings and data products providers could consider a number of factors related to issuing high-quality ratings and data products, including publicly disclosed data sources, defined methodologies, management of conflicts of interest, high levels of transparency, and handling confidential information. The recommendations also suggest that users of ESG ratings and data products could consider conducting due diligence on the ESG ratings and data products that they use within their internal processes. Recommendations also cover suggestions that ESG ratings and data products providers, and entities subject to assessment by ESG ratings and data products providers, could consider to improve information gathering processes, disclosures and communication between providers and entities subject to assessment.

     

    Related Links

    Keywords: International, Banking, Insurance, Securities, ESG, ESG Ratings, ESG Data Product Providers, Guidance, IOSCO

    Related Articles
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    News

    US Agency Publications Address Basel, Reporting, and CECL Developments

    The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances

    May 09, 2022 WebPage Regulatory News
    News

    SEC Extends Comment Period on Climate Risk Disclosures

    The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.

    May 09, 2022 WebPage Regulatory News
    News

    APRA Reduces Committed Liquidity Facility, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.

    May 09, 2022 WebPage Regulatory News
    News

    CMF Consults on Basel Rules, Presents Roadmap to Address Climate Risks

    The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.

    May 06, 2022 WebPage Regulatory News
    News

    PRA Issues Statement on NPEs and Policy on Trading Activity Wind-Down

    The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.

    May 06, 2022 WebPage Regulatory News
    News

    EBA Updates Standards for 2023 Benchmarking of Internal Approaches

    The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.

    May 06, 2022 WebPage Regulatory News
    News

    EIOPA Responds to Stakeholder Views on Blockchain in Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.

    May 06, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8168