The International Organisation of Securities Commissions (IOSCO) has recently published the results of its initial consultation regarding the need, and the potential methods for regulating the ESG Ratings and Data Products providers that exist to meet the needs of the marketplace in its new endeavour to incorporate the concept of ESG into everything it does. The first stage of the consultation was mainly aimed at the profession, and then the direct users of the profession. Now, IOSCO is opening the consultative period to the wider public for comments on its ten recommendations . In this post, we shall examine those recommendations.   The report itself is, majoritively, an opening account of the new market. It is useful for the uninitiated. Whilst not necessarily diving into every complexity (which is perhaps not its aim), the report covers the different providers, the usage of the differing products, and also some of the major criticisms being aimed at the ESG rating industry, ran

Ahead of the US House Committee on Financial Services’ Subcommittee’s hearing on ‘Examining the “Nationally Recognised” Statistical Rating Organisations (“NRSROs”)’, the President of Fitch Ratings – Ian Linnell – has released his prepared statement that he will read to the subcommittee as one of the witnesses called. There are a number of issues raised in his statement, and they are worth reviewing before the Hearing today (which can be accessed here from 2pm EST [7pm UK]). There are also a number of interesting points raised by the other witnesses called, but we shall start with Mr Linnell.   After some preamble regarding the theorised position of the credit rating agencies within the financial marketplace – and it is important that we keep this concept of the theorised position of the agencies, and their actual position, in the forefront of our minds – Linnell makes the point that whilst Fitch supports the concept of Congress looking to expand the regulatory framework in certai

The issue of regulating the so-called ESG Rating Agencies has been reviewed here in the CRRI blog a few times recently – here and here . One thing that is for sure is that the issue of needing to regulate the agencies and their growing influence is now firmly on the global agenda. In the EU, which for quite a while has been calling for regulation in this niche space , there is a document due out any moment which should formally start that regulatory process within the bloc. In this short post, we will take a look at the Strategy for Financing the Transition to a Sustainable Economy .   Different media outlets are reporting different things with regards to the new Strategy document being compiled within the EU, which should be unveiled this week. Bloomberg cites the aim as being to prevent greenwashing, and says that the Strategy will ‘ propose tightening reporting requirements for financial entities and incorporating climate-related risks into credit ratings and bank capital requ

The CRRI is solely focused on the larger-scale rating agencies (inclusive of ESG rating agencies), but news recently regarding Credit Reporting Agencies like Equifax, Experian, and others has the potential to be impactful upon the development of the credit rating industry. It can a little complicated to understand the differences, so in simple terms there are credit rating agencies which focus on companies and the issuance of bonds (and also structured finance instruments etc. [an easy way to think of credit rating agencies is providing services for the wider ‘capital markets’ like large-scale investors etc., though this is a massive oversimplification), credit reporting agencies that focus on businesses and providing reports on their suitability for lenders/suppliers etc., like Dun & Bradstreet , and consumer reporting agencies, which provide creditworthiness reports on individuals. It can get confusing as some provide creditworthiness reports both for businesses and consumers (