Ahead of the launch of a new regulatory regime for ESG ratings providers in 2028, the U.K.’s Financial Conduct Authority (FCA) is launching a pilot project to help calibrate the rules.
The regulator has called on ratings providers to volunteer to participate in a pilot program, which it said will help it avoid creating a needless regulatory burden when the full regime takes effect, by helping it develop proportionate requirements.
Specifically, the FCA said that the pilot will inform both the design of the reporting framework and the reporting requirements themselves — supporting its efforts to establish metrics for ESG ratings reporting that are clear, useful to regulators and proportionate across different business models.
The new regime, which will require ESG ratings providers to be registered and subject to FCA oversight, is slated to come into force on June 29, 2028.
The initiative is intended to make ESG ratings more transparent, reliable and comparable — and to support both investor confidence and the growth of sustainable finance.
Last year, the FCA undertook a consultation on the proposed rules for a new ESG ratings framework that has now closed. The pilot project will be based on the initial approach set out in that consultation, although the rules have yet to be finalized. The final rules are slated to be released in the fourth quarter.
Based on the feedback generated by the pilot project, “we may revise the metrics for the eventual reporting regime,” the FCA said.
The deadline for volunteering to take part in the pilot project is May 13.