The EU has reached a provisional agreement how ESG ratings will be regulated, in an attempt to bring harmonisation, clarity and confidence.

ESG rating providers will, under the proposals, need to be authorised by the European Securities and Markets Authority (ESMA) and the ESG components will be broken down into their separate E,S and G parts.

Ratings have, so far, been somewhat haphazard, with several accusations of greenwashing and frustration from some of the reputable providers.

The UK is taking a slightly different approach, seeking a voluntary code of conduct for raters, and reserving regulation should that not produce the desired result.

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