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Regulators to unlock ‘black box’ of ESG corporate ratings

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A woman points to an electronic board showing stock prices as she poses in front of the board after the New Year opening ceremony at the Tokyo Stock Exchange (TSE), held to wish for the success of Japan’s stock market, in Tokyo, Japan, January 4, 2019. REUTERS/Kim Kyung-Hoon/File Photo

LONDON, July 26 (Reuters) – Global regulators took a first step on Monday to unlock the “black box” of corporate environmental, social and governance (ESG) ratings suggesting formal oversight of a sector which helps channel trillions of dollars into climate-friendly investment funds.

Despite growing influence, ESG raters and data providers are largely unregulated, lack transparency in their methods, offer uneven coverage and harbour potential conflicts of interest, said the International Organization of Securities Commissions (IOSCO), which groups market regulators from the United States, Europe and Asia.

Asset managers running ESG focused funds increasingly rely on about…

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