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In September 2022, the FCA sent a portfolio letter to benchmark administrators where the FCA highlighted the risk of poor disclosures for ESG benchmarks. High quality ESG benchmarks are important to support trust in the market for ESG products and the transition to a net zero economy.

The FCA have now completed a preliminary review on ESG benchmarks. This found that the overall quality of ESG-related disclosures made by benchmark administrators was poor. The FCA have sent a further letter to administrators outlining the issues identified, including:


The FCA expect all benchmark administrators to have strategies to address the issues identified in this letter. The FCA will be doing more work in this area to address the potential failings, and expect firms to be able to explain these strategies on request. The FCA will use the full range of their tools where this does not happen.

The FCA have previously said that the FCA support regulation of ESG ratings. The FCA are working closely with Government on this, who are expected to shortly consult on whether and how to extend the FCA’s perimeter to include ESG ratings providers. The FCA also support and encourage the development of a voluntary Code of Conduct for ESG data and ratings providers.

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