FirstFT: UK set to unveil plans to regulate ESG rating agencies

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The UK government is set to press ahead with plans to regulate agencies that evaluate the environmental, social and governance performance of companies, the latest in a global crackdown on the sustainable ratings industry.

Ministers intend to unveil formal proposals as early as January next year following a three-month consultation that closed in June, Whitehall insiders told the Financial Times.

The Treasury is examining whether regulating ESG agencies will require fresh legislation or could be achieved through measures implemented under existing laws, people familiar with the matter said. The people cautioned that ministers were still formally analysing the consultation responses.

Although a proposal to create a new watchdog has not been ruled out, they added, expanding the remit of the Financial Conduct Authority is considered the likelier option. Lucy Fisher and Kenza Bryan have the full story.

Here’s what else I’m keeping tabs on today:

• Central banks: Bank of England governor Andrew Bailey, Aviva chief Amanda Blanc and senior officials from the European Central Bank and Banca d’Italia are due to speak at a conference organised by the Central Bank of Ireland. Premium subscribers can sign up for our Central Banks newsletter by Chris Giles for weekly insights, or upgrade your subscription.

• Economic data: The eurozone has September retail sales, and Germany reports its October consumer price index.

• Results: ABN Amro, Adidas, Bayer, Bertelsmann, Commerzbank, Crédit Agricole, Eneos Holdings, Lyft, Marks and Spencer, Walt Disney Company, JD Wetherspoon and Virgin Galactic Holdings have results. Sign up for our Week Ahead newsletter for a weekly preview of the companies reporting.

Join us in London or online for our Global Wealth Management Summit today and tomorrow to discuss shifting investment strategies, regulation and business models for a wealth industry in flux. Register here.

Five more top stories

1. Exclusive: Google, Vodafone, Orange and other telecoms groups are pushing the EU to designate iMessage as a “core” service that would require Apple to make the chat app fully compatible with rivals such as WhatsApp. The letter, sent to the European Commission and seen by the FT, comes as the executive body is investigating whether iMessage should be on a list of services that must comply with the new Digital Markets Act. Javier Espinoza has more from Brussels.

2. Benjamin Netanyahu claimed Israel’s month-long offensive against Hamas had been an “extraordinary success” as Israeli troops began operating inside Gaza City. The prime minister’s comments came after he had earlier said Israel would maintain an indefinite grip over Gaza after its war with Hamas. Here are the latest updates on the war.

• Battle for Gaza City: The ground invasion exposes Israeli troops to the perils of close combat in an urban environment against dug-in Hamas fighters.

• Market reaction: Oil prices tumbled to the lowest in more than three months yesterday, reversing all gains made since Hamas attacked Israel on October 7.

3. Two of the world’s biggest private equity firms have reported starkly diverging fortunes as KKR boosted its fundraising expectations while Carlyle axed jobs as part of a cost-cutting drive. The results underscore how the two investment groups, which were roughly the same size a decade ago, have since moved apart.

4. Rapid wage increases in central and eastern Europe risk eroding the region’s competitive edge, the IMF has warned, as productivity has largely stalled despite incomes rising at double-digit levels. While the pay rises in the region top the EU tables, inflation has also exceeded the bloc’s average. Here’s what the fund says governments should do.

5. Britain has agreed a £4bn air defence deal with Poland in the wake of Russia’s invasion of Ukraine. The UK will equip Polish forces with a ground-based air defence system capable of countering threats such as cruise missiles and fighter jets at ranges of more than 40km. Here’s more on the largest-ever export deal between the countries.

News in-depth

Earth is nearly certain to experience its hottest year after October smashed temperature records, with air and sea temperatures and sea ice levels this year “something out of a Hollywood movie”, said one climate scientist. The UN secretary-general has blamed governments for “runaway climate carelessness” by failing to cut fossil fuel production, as the world edges closer to the 2015 Paris agreement goal of limiting the rise in average temperatures to ideally 1.5C, or well below 2C, since the industrial era.

We’re also reading . . . 

Chart of the day

Central banks are at odds over how to respond to a possible jump in energy prices should the Israel-Hamas war escalate. While rate-setters have conventionally ignored volatility in the energy markets, central bank heads in Canada and the UK have signalled they would need to address the inflationary risk of higher oil and gas prices, while their European and US counterparts appear more relaxed.

Take a break from the news

What drove the French to overthrow the monarchy? From protest literature to word-of-mouth, historian Robert Darnton’s new book The Revolutionary Temper provides a very fine account of how 18th-century Parisians received and interpreted public events, writes Tony Barber, putting them on the road to revolution.

Additional contributions from Benjamin Wilhelm and Gordon Smith