Poros Group · ESG
What I heard at an ESG breakfast: IFRS alignment, ratings methodology, and rating the raters
Aakash Kapur
While waiting for perfect clarity on regulation and ratings, many teams still have to focus on the immediate path ahead, continuing to build processes, controls, and data collection systems that are future-proof in the face of the next iterations of regulation and investor appetite.
A few themes that came through strongly as I bounced around the room at an ESG breakfast today.
1) IFRS S1/S2 and global alignment
As more jurisdictions move toward ISSB-aligned disclosure, many organisations are tracking their exposure globally to understand where they will be held accountable based on local rules that differ in scope. This is a huge contrast to Q1 2025 when UK professionals were far more focused on the CSRD. Track global updates in this link I check every other week: IFRS Sustainability Disclosure Standards around the world.
2) Ratings updating methodologies
Ratings updating methodologies can be as difficult to track as Omnibus updates… We spent time on MSCI's methodology updates and what they could mean for investor interpretation and fund allocations. We also heard how ISS is showing up more frequently for UK companies than in prior years, another signal that ISS might be growing its European presence of engagement.
3) "Rate the raters" is moving from concept to reality…
…albeit a bit slowly if you're focusing on the year ahead for now. The UK's direction of travel toward regulating ESG ratings is prompting practical questions: transparency, governance and controls, conflicts, and how corporates can engage constructively with providers. This is garnering both positivity and pinches of salt from corporates, but now is your best chance to have an impact, as the FCA is taking consultations here: CP25/34: ESG ratings — proposed approach to regulation.