CDP is pleased to announce our formal endorsement of the Japanese Financial Services Agency (FSA) Code of Conduct for ESG Evaluation and Data Providers and outline how CDP complies with the code where they apply to our activities. ESG ratings and data products have proliferated in prompt response to investors’ increased demand for ESG data and its subsequent assessments. However, significant shortcomings in their objectives and methodologies for data gathering and rating have been identified, leading policymakers and regulators such as the Japanese FSA to start to explore the topic.
CDP has long recognized the importance of this area, around which studies remain limited. In our landmark report, Data for Public Good1, we take a deep dive into the topic and unpack the regulatory scrutiny these tools are now facing. Regulators are exploring ways to ensure that products are not used for greenwashing, but rather to support the allocation of capital to sustainable activities. In our report, CDP recommends the way forward.
Current policymaking efforts around ESG ratings and data products providers focus on robust governance, management of conflicts of interest, systems and controls, and transparency in methodologies. We are proud to say that these considerations are already at the heart of our mission as a not-for-profit and well embedded into CDP’s operations. As such, we are delighted to endorse the FSA’s Code of Conduct in line with our valued principle of transparency.