The Monetary Authority of Singapore (MAS) has released the finalised Code of Conduct for ESG Rating and Data Product Providers (CoC), accompanied by a checklist following a public consultation that took place from June to August2023.
The CoC is designed to establish baseline industry standards, focusing on transparency in methodologies and data sources, effective governance, and the management of potential conflicts of interest that could impact the reliability and independence of these products. This initiative also aligns with the recommendations for good practices set out by the International Organisation of Securities Commissions.
The responses to the consultation highlighted strong support for the CoC. There was a consensus among users that, where feasible, providers' self-attestation on the checklist should be subjected to third-party assurance or audit to ensure compliance and reliability.
MAS is encouraging providers to publicly disclose their adoption of the CoC and to publish their completed checklist within 12 months of the CoC's publication. To facilitate this, MAS has collaborated with the International Capital Market Association (ICMA) to host a list of providers who have adopted the CoC on ICMA's website.
MAS intends to continue monitoring industry developments and the global regulatory environment to determine if further enhancements to the regulatory framework for these providers are necessary.
MAS assistant managing director for capital markets Lim Tuang Lee said the code would contribute to market confidence in the use of ESG rating and data products. By setting baseline transparency standards, the CoC aims to enhance the comparability of ratings and data products.
“The code also encourages disclosures on how forward-looking elements are considered in such products, which will improve investors’ assessments of investee entities’ responses to transition risks and opportunities. Overall, the code will support informed decision making by investors keen on funding the climate transition. We welcome adoption by ESG rating and data product providers as soon as they are ready,” Lee said.
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