We’ve been following developments in the EU as the long-awaited ESG Ratings Regulation moves through the legislative process. The regulation, officially adopted last November, hit another milestone recently when the European Supervisory Market Authorities (ESMA) put forward draft Regulatory Technical Standards (RTS). According to Linklaters, these RTS include:
- “The information that should be provided in the applications for authorisation and recognition.
- The measures and safeguards that should be put in place to mitigate risks of conflicts of interest within ESG rating providers who carry out activities other than the provision of ESG ratings. These are divided into organisational requirements that are applicable to all ESG rating providers, and more specific technical and control measures that apply in the case of certain specified activities.
- The information that they should disclose to the public, rated items and issuers of rated items, as well as users of ESG ratings. This is to ensure that to the extent possible, ESG rating providers will disclose the required information in as comparable and consistent a manner as possible.”
The draft RTS will be open for consultation until June 20, 2025, with final RTS standards finalized and submitted to the EU Commission by October. The ESG Ratings Regulation is set to take effect on July 2, 2026, and is expected to increase transparency in what has been a historically opaque industry. Proponents are hopeful that the regulation will give investors and other ratings users more confidence in ESG ratings, which have been known to vary widely between ratings agencies.
Members can read more about ESG ratings here.
If you aren’t already subscribed to our complimentary ESG blog, sign up here for daily updates delivered right to you.
DID YOU KNOW … we are much more than just blogs. If you’re not already a member, sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. But it will probably pay for itself before then.
Are you a client of one of our Partners? Contact them for exclusive pricing packages for PracticalESG.
