MAS kicks off public consultation for code of conduct of ESG ratings, data products

The proposed code will establish minimum industry standards of transparency in methodologies and data sources.

The Monetary Authority of Singapore (MAS) has launched a public consultation on an industry code of conduct for providers of environmental, social, and governance (ESG) ratings and data products.

The proposed code of conduct establishes minimum industry standards of transparency in methodologies and data sources, governance, and management of conflicts of interest. 

The code of conduct was co-created with ESG rating and data product providers, and modelled closely after the the International Organization of Securities Commissions’ (IOSCO) recommendations of good practices as set out in its “Call for Action” paper.

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In the consultation’s announcement, Singapore’s financial regulator noted how ESG ratings help assess the impact of ESG factors on entities, as well as the growth in its use for investing and capital allocation as sustainability-related risks and opportunities in capital allocation become increasingly 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, adding that IOSCO Final Report on ESG Rating and Data Product Providers highlighted the lack of transparency of methodologies and data sources, governance and controls, as well as management of conflicts of interest as key areas of concern.

MAS added that it will monitor the implementation of the industry code and observe global developments before taking further steps to formalise a regulatory framework for ESG rating providers.

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Interested parties are invited to submit their comments by 22 August 2023 at the MAS website.