IOSCO calls for greater oversight and transparency in ESG ratings and data products
The International Organization of Securities Commissions (IOSCO) has published a comprehensive report with observations and recommendations relating to environmental, social and governance (ESG) ratings and data product providers. It is based on a fact-finding study and consultation carried out by IOSCO. The final report urges regulators to focus greater attention on ESG ratings and data products, providing specific recommendations on the development of frameworks, in hopes of building trust in this information going forward. The recommendations also address the methodologies and procedures used by providers of ESG ratings and data products, and how they can promote transparency and data quality.
The rapid growth of the market for these products has drawn the attention of IOSCO. Chairman Ashley Alders states that “ESG ratings and third-party data products have played an important role in the ESG ecosystem so far, especially in the absence of consistent and comparable issuer disclosures. Their significance and usefulness will only continue as capital markets intensify efforts to support the shift towards a net zero economy.”
Most ratings are publicly available, at least at a high level. We might be so bold as to suggest that information of this sort should be published in a machine readable format in conformance with an — ahem — widely used digital standard.