ESG+ Newsletter – 4 December 2025

UK to regulate ESG Ratings to boost transparency and credibility  

The UK is moving to tighten oversight of the ESG ratings industry, with the Financial Conduct Authority (FCA) unveiling plans to regulate providers, Reuters reports. The sector has expanded rapidly as investors increasingly use sustainability scores, yet concerns have mounted over inconsistent methodologies, limited transparency and potential conflicts of interest, particularly when firms both assess companies and sell them advisory services. Under the FCA’s proposal, ratings providers would need to provide specific details on what they measure, disclose and manage conflicts, ban staff from trading related securities, and publish clear processes for handling complaints. The shift follows new legislation passed in October and aligns the UK with similar efforts underway in the EU and other jurisdictions. From mid-2028, only FCA-authorised firms will be permitted to issue ESG ratings. The move supports the government’s ambition to strengthen the UK’s position in sustainable finance, with investors noting that ratings should inform – rather than replace – independent analysis.

AI trust gap emerging among US workforce

The American workplace’s overarching distrust in artificial intelligence (AI) is an emerging corporate ESG consideration. As reported by ESG Dive, a survey conducted by talent insight firm SHL found that 74% of workers believe an AI agent-conducted job interview would change their perception of a company; while 37% view this AI use-case as “ impersonal,” 23% see it as “innovative.” Notably, only 27% of surveyed adults confidently trust their employers to use AI in a responsible manner. This widespread distrust in AI in the workplace demonstrates how implementation of technology significantly impacts the social dimension of ESG frameworks. As organisations increasingly adopt AI tools, employee concerns must be simultaneously addressed through employer transparency and appropriate human oversight. Implementation of AI can positively enhance workplace and employee satisfaction, but only with governance controls in place to optimise its efficiencies by building AI fluency in a sustainable way. Overall, the U.S. workforce’s skepticism around AI highlights how technology adoption directly impacts social considerations, including employee trust and upskilling.  

UK board fees raise additional concerns over market attractiveness

New research, reported on by the Financial Times, shows that payments to UK non-executive directors have fallen by more than 10 per cent in real terms over the past decade, raising concerns that London-listed companies may struggle to attract experienced Board members. The findings come against the backdrop of a decline in listings on the London Stock Exchange in recent years and add to fears that the City is losing its appeal, in particular when compared with the US.  

Median base fees for FTSE 100 non-executive directors have fallen 11.8 per cent behind consumer price inflation, even as tighter regulations have made the roles more demanding and complex. Currently, median base fees for FTSE 100 non-executives stand at £81,000 a year, while chairs receive £475,000. Additional payments for chairing board committees typically range from £17,000 to £27,000. By comparison, non-executive directors at US-listed companies of similar size receive base fees that are three times higher.  

The research suggests that, without competitive fees, UK-listed companies could struggle to attract top board talent compared with US firms. This echoes previous debates on executive remuneration and highlights how the UK’s pay environment may affect access not only to leading executives but also to those responsible for overseeing their performance. 

UK adds nuclear to Green financing framework

The UK has added nuclear energy to its Green Financing Framework, allowing green gilts and savings bonds to fund nuclear projects alongside renewables, ESG News reports. The move aligns the UK with growing global support for the green credentials of nuclear power: multilateral lenders and major financial institutions are increasingly open to financing nuclear as part of long-term decarbonisation strategies. Proponents of nuclear power point to its reliability and low carbon intensity, key advantages as governments grapple with energy costs while attempting to maintain net-zero commitments. Detractors, however, continue to point to risks and impediments, most notably waste generation and the high costs associated with running nuclear power.

For UK companies, the decision opens a new pool of low-cost green capital for nuclear development and strengthens investment cases for those long-term assets. Globally, corporations across energy, infrastructure and heavy industry may see nuclear as a more viable investment option, potentially diversifying the competitive landscape for low-carbon technologies and reshaping long-term investment strategies.

DEI Greenhushing is leading foreign investors to increase stewardship in the US 

According to UK-based asset managers, greenhushing by US companies is likely to draw more investor stewardship efforts to the country,, Environmental Finance reports. Lisa Beauvilain, global head of sustainability and stewardship at Impax Asset Management, notes that greenhushing has been most common in the US. As a result, she expects stewardship efforts to concentrate there. Harry Asham, senior engagement specialist at Robeco, highlights a finding by proxy advisor ISS, which found that DEI-related compensation metrics for companies listed in the S&P 500 index declined by about 30 percent.  Asham adds that companies he speaks with often say that they are still doing the work but cannot talk about it. This means he must take the company’s word that these actions continue behind the scenes. This potential lack of transparency creates barriers for investors who often prefer transparent corporate disclosures to aid decision making.

ICYMI

• Responsible Investor reports that the International Sustainability Standards Board (ISSB) has published an internal assessment on whether additional standard-setting on human capital is needed. The publication comes ahead of a board meeting next week. 
• The European Commission has launched a consultation for the development of a bloc-wide framework for climate resilience, due for adoption in Q4 2026. Responsible investor notes that this follows a review of an earlier call for evidence, which showed broad agreement among respondents that the current EU policy framework for climate resilience is not fit for purpose.