The Financial Conduct Authority has made final rules that bring providers of environmental, social and governance (ESG) ratings into UK regulation for the first time. The framework, set out in Policy Statement PS26/22, takes effect on 29 June 2028. From that date, firms providing ESG ratings in the UK will need FCA authorisation and the relevant permission before carrying on that activity, unless an exemption applies. Applications for authorisation open on 24 June 2027.
According to the FCA, the rules are designed to improve the transparency, reliability and comparability of ESG ratings and to build confidence in the information investors rely on. The regulator said the regime will raise standards in a market that plays an important role in investment decisions.
What the regime covers
The regime applies to firms or organisations providing ESG ratings and assessments. The FCA describes ESG ratings as assessments of how companies or other entities, assets or financial products perform against environmental, social and governance criteria. It says they are used by asset managers, lenders, benchmark administrators and others to inform capital allocation decisions and manage risk. The FCA has issued guidance to help firms determine whether they may be in scope.
The framework introduces requirements covering transparency, governance, systems and controls, the management of conflicts of interest, and engagement with both users of ESG ratings and rated entities. The FCA states that the regime regulates how ratings are produced, governed and communicated, and does not prescribe a particular sustainability view or methodology. It is intended to be proportionate to firms' size and activities and is informed by international and existing standards, including recommendations from the International Organization of Securities Commissions.
Application windows and preparation
The FCA is staggering application periods and encourages firms to apply as early as possible within their window. It said firms that may be in scope should start preparing now, including by assessing whether the framework applies to their activities, reviewing the final rules and guidance, considering whether they need authorisation and engaging early with FCA support. The regulator will offer webinars and access to its Pre-Application Support Service.
Laura Dawes, director of authorisations and sustainable finance at the FCA, said trusted information is essential for well-functioning markets and that the rules will help improve transparency and raise standards while supporting competition, innovation and growth. She said firms should check now whether they are in scope and start preparing for authorisation.
The final rules follow the FCA's consultation CP25/34, which ran from 1 December 2025 to 31 March 2026. The regulatory framework follows government legislation in October 2025 that brought the provision of ESG ratings within the FCA's remit; according to the FCA, 95% of respondents to the government's consultation supported that move. The regulator also cited its Financial Lives Survey 2024, which found that 72% of adults with investments or a defined contribution pension wanted their investments to do some good as well as provide a financial return.