ESG scores can be problematic for investors because they're largely based on self-reported and unaudited data from companies. Varying methodologies among ratings providers can also result in big discrepancies.
Sustainalytics and Institutional Shareholder Services, two of the biggest providers of ESG data and ratings, said they supported the FSA's flexible, principles-based approach, as well as its alignment with IOSCO's recommendations.
However, the firms raised concerns about the scope of the guidelines, which they say ought to focus on ESG ratings, not data products.
"We do not see a public policy justification for raising unique scrutiny of ESG data," ISS wrote in its feedback email to the FSA. "ESG data should be treated on a level regulatory playing field relative to 'traditional' financial data and its providers."
Sustainalytics, a unit of Morningstar, said the code may be hard to implement, "leading firms to opt out of the voluntary standard, at least to the extent it applies to data."
MSCI, another data provider, declined to comment to Bloomberg.
Bloomberg News parent Bloomberg LP also provides ESG data and ratings.