FCA Consultation Paper on ESG ratings regulation

We refer to the consultation on Regulating ESG rating providers (CP25/34). We appreciate the opportunity to provide our investor perspective.

Norges Bank Investment Management is the investment management division of the Norwegian Central Bank (Norges Bank) and is responsible for investing the Norwegian Government Pension Fund Global. NBIM is a globally diversified investment manager with approximately 21,300 billion Norwegian kroner under management. Of these, about GBP 80 billion was invested in the United Kingdom at year end 2025.

As a long-term and global investor, we consider our returns to be dependent on sustainable development in economic, environmental, and social terms. We are a user of ESG ratings and have an interest in a well-functioning ESG data and ratings market. While we do not apply individual ESG ratings directly to make investment decisions, we use them in combination with other information to make informed judgments. Our internal analysis of sustainability-related portfolio risk draws on the data, metrics and indicators underlying ESG ratings, rather than the ratings themselves.

We welcome the FCA’s work to establish a regulatory framework for ESG rating providers that aligns with international best practice. The proposals should enhance transparency, reliability, and integrity in ESG ratings, benefiting investors and supporting the well-functioning of financial markets. The market for ESG ratings is global, hence we welcome the strong alignment of the FCA’s proposals with the 2021 IOSCO recommendations and the ICMA voluntary Code of Conduct, which will facilitate interoperability with regulatory frameworks in other jurisdictions.

We support the structure of the proposed regime around the key outcomes of good governance, systems and controls, transparency, and stakeholder engagement. Increased transparency on ESG ratings can notably enhance pricing efficiency and the well-functioning of markets. The diversity in the assumptions, objectives, and methodological approaches used by rating providers might not always be apparent to clients and other stakeholders, which can cause ESG ratings to be misinterpreted. We believe that the variety of rating products being available on the market is positive, but enhanced transparency is needed to help users understand the differences.

We support the FCA’s proposed two-tier disclosure framework, which appropriately distinguishes between public disclosures and more detailed disclosures to users and rated entities. This structure is consistent with our view that there should be clear differentiation between general methodological disclosures (made publicly) and specific rating disclosures (made to users and rated entities). Finally, we make some suggestions for incremental disclosures we would find valuable, and conversely underline some proposed disclosures which in our view do not create significant benefit and could be reconsidered. We believe that the FCA has overall struck a sensible balance on the proposed transparency requirements, but would encourage continued consideration on the potential burden for smaller market players and innovative firms entering the ESG rating market.

We particularly welcome the proposed minimum public disclosure requirements on rating methodologies, which cover the approach to materiality, weighting and aggregation of different ESG factors being assessed, the absolute or relative nature of the ratings, and information on type of data used and their sources, as well as summary disclosures on the main data policies and processes including on gaps. We suggest incrementing these disclosures with information on rating providers’ quality assurance process, and more explicit requirements on how peer groups are selected, if the rating is expressed in relative terms.

Regarding disclosures required for users and rated entities, we suggest that some of the proposed disclosures are applied at product level rather than individual rating level, where such information is in practice unlikely to vary by rated entities. This could include information on how data is estimated and how data gaps are handled. Alternatively, detailed explanations of the sources of specific data points used in the rating could potentially be made available upon request by either the rated entity or user, rather than systematically disclosed. Conversely, we suggest the FCA enhances the proposed disclosure on the outcome of methodology reviews by requiring information on how historical ratings are treated.

Our detailed response to the consultation questions is set out in the annex. We have focused our comments on those questions where we have specific views to contribute.

We thank you for considering our perspective and remain at your disposal should you wish to discuss these matters further.

Yours sincerely

Carine Smith Ihenacho      

Chief Governance and Compliance Officer                

Elisa Cencig                 
Head of Policy Engagement