ICMA Publishes New Paper on the Role of ESG Ratings and Data Products in Sustainable Finance

Why It Matters

The findings signal that investors and issuers must align with evolving ESG standards to maintain credibility and meet fiduciary duties, while regulators gain a roadmap for balanced oversight.

Key Takeaways

• Transparency improved since IOSCO 2021 final report
• Third‑party ESG ratings remain heavily relied upon
• Internal ESG scores increasingly complement external data
• ICMA Code boosts governance and comparability
• Proportionate regulation could enhance market stability

Pulse Analysis

The International Capital Market Association’s March 2026 paper maps a rapidly shifting ESG ratings ecosystem, drawing on a survey of asset owners and managers that collectively oversee roughly $28 trillion in assets. It shows that ESG scores—both third‑party and internally generated—have moved from niche tools to core components of equity, debt and loan underwriting, risk modeling, and engagement strategies. Investors now treat these metrics as decisive inputs for portfolio construction and compliance, prompting a surge in demand for transparent, comparable data. This heightened reliance underscores the market’s need for consistent standards.

Regulators have responded with a blend of voluntary codes and formal rules. IOSCO’s 2021 recommendations sparked market‑led initiatives in Japan, Singapore, the United Kingdom and Hong Kong, where ESG rating providers adopted the ICMA Code of Conduct. The code emphasizes disclosure of methodologies, governance safeguards and comparability metrics, and has quickly become a reference point for investors seeking assurance. Meanwhile, the European Union, India and the UK have introduced or are drafting legislation that codifies many of the same principles, creating a layered regulatory environment that still respects market innovation.

Looking ahead, proportionate regulation could sharpen transparency without stifling the rapid development of bespoke ESG data products. The interaction between voluntary codes, statutory rules, internal scoring models and standardized sustainability disclosures will determine the market’s trajectory, influencing everything from capital allocation to risk‑adjusted pricing. Stakeholders that align early with the ICMA Code and emerging regulatory expectations are likely to gain a competitive edge, as investors increasingly demand verifiable, comparable ESG information to meet fiduciary duties and climate‑related mandates.