MAS releases Code of Conduct to boost transparency in ESG Rating and Data Products

SINGAPORE: On Wednesday, Dec 6, the Monetary Authority of Singapore (MAS) unveiled its finalised Code of Conduct to boost transparency in ESG Rating and Data Products, along with a self-attestation Checklist. The release comes after a public consultation held from Jun to Aug 2023.

MAS commits to monitoring ongoing industry developments and global regulatory changes, remaining open to further regulatory enhancements for ESG rating and data product providers. The Code of Conduct represents a crucial step towards building market confidence in utilising ESG rating and data products. By establishing transparent standards for rating methodologies and data sources, the CoC enhances the comparability of ratings and data products, fostering more informed decision-making for investors keen on contributing to the climate transition.

Mr Lim Tuang Lee, Assistant Managing Director (Capital Markets) at MAS, expressed optimism about the Code’s impact. He stated, “The Code of Conduct will help build market confidence in the use of ESG rating and data products. Its baseline transparency standards for rating methodologies and data sources will improve 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.”

The primary objective of the Code of Conduct (CoC) is to set foundational industry standards, ensuring transparency in methodologies, data sources, governance, and the management of potential conflicts of interest. Rooted in the International Organisation of Securities Commissions’ (IOSCO) recommendations, the CoC received robust backing from respondents during the consultation period. Stakeholders underscored the importance of providers undergoing third-party assurance or audit wherever feasible, strengthening the reliability and independence of their products.

In response to industry feedback, MAS encourages providers to disclose their CoC adoption publicly and share their completed checklist within 12 months of the CoC’s publication. In collaboration with the International Capital Market Association (ICMA), MAS has facilitated hosting a list of providers who have embraced the CoC on the ICMA’s website. This move aims to assist users in quickly identifying providers committed to transparency standards.

For more information on the Code of Conduct and the Checklist, along with MAS’ response to the public consultation, you can check it here./TISG