MAS Releases ESG Rating Conduct Code

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by KnowESG
KnowESG_MAS Releases ESG Rating Conduct Code
Image courtesy of MAS

The Monetary Authority of Singapore (MAS) has officially released its finalised Code of Conduct for ESG Rating and Data Product Providers (CoC), along with a corresponding Checklist for providers to self-affirm their adherence to the CoC.

The primary objective of the CoC is to establish foundational industry standards, focusing on transparency in methodologies and data sources, governance, and conflict of interest management.

These standards are crucial to ensuring the reliability and independence of the products. The CoC builds upon the recommendations set forth by the International Organisation of Securities Commissions (IOSCO) for good practices among such providers.

Stakeholders who participated in the consultation have expressed robust support for the CoC, with consensus among users that providers' self-attestation on the Checklist should ideally undergo third-party assurance or audit.

MAS actively encourages providers to disclose their adoption of the CoC and publicly share their completed Checklist within 12 months of the CoC's publication. To facilitate easy identification of providers embracing the CoC, MAS has collaborated with the International Capital Market Association (ICMA) to host a list of such providers on the ICMA's website.

The regulatory body commits to ongoing vigilance, monitoring industry developments and global regulatory landscapes to assess the need for any further enhancements to the regulatory framework governing such providers.

Mr. Lim Tuang Lee, Assistant Managing Director (Capital Markets) at MAS, expressed, “The Code of Conduct will instill market confidence in the utilisation of ESG rating and data products. By establishing transparency standards for rating methodologies and data sources, it enhances the comparability of ratings and data products.

"The Code also prompts disclosures on how forward-looking elements are incorporated, improving investors’ evaluations of investee entities’ responses to transition risks and opportunities. In essence, the Code supports well-informed decision-making by investors committed to funding the climate transition. ESG rating and data product providers are encouraged to adopt the Code at their earliest readiness.”

For more comprehensive information on the CoC and the Checklist, as well as MAS' response to the public consultation, please refer to the MAS website.

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Source: MAS

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