The Monetary Authority of Singapore recently launched a public consultation on the industry code of conduct for providers of ESG ratings and data products.
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The code of conduct will establish the minimum industry standards of transparency in data sources and methodologies, governance, and management of conflict of interest.
The proposed code was co-created with ESG rating and data product providers. It is modelled after the International Organization of Securities Commission’s recommendations of good practices in its “Call for Action” paper.
In the announcement for the consultation, MAS noted how ESG ratings do wonders in assessing the impact of ESG factors on entities, and its growth for investing and capital allocation as sustainability becomes mainstream.
“The industry is nascent and rapidly changing, and regulators globally are at various stages of developing regulatory approaches for these providers,” MAS stated in a press release.
The authority also added that the IOSCO Final Report on ESG Rating and Data Product Providers listed key concerns which include the lack of transparency of methodologies and data sources, governance and controls, as well as management of conflicts of interest.
According to MAS, it will monitor how the industry code will be implemented. It will also observe global developments before taking more steps in making a formal regulatory framework for ESG rating providers.
Interested parties may submit their comments before 22 August 2023 on the MAS website.
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