The EU’s ESG Ratings Regulation entered force on July 2. The Regulation requires ESG raters to acquire ESMA authorization to operate in EU markets. However, there was ambiguity regarding the obligations of third parties who publish the ratings of unauthorized firms. The European Securities and Markets Authority recently issued a public statement clarifying these obligations and extending an exemption to third parties until November. The statement notes:
“After 2 November 2026, it will no longer be possible for third parties to publish or distribute the ESG ratings of an ESG rating provider, unless such provider (i) has submitted an application for authorisation or recognition, or has submitted a notification for registration under the temporary regime for small ESG rating providers; and (ii) is listed in the Article 14 register that will become available on the ESMA website.
After 2 November 2026, third parties should consult this register to determine the identities of the ESG rating providers from which it will be possible to continue to publish or distribute ESG ratings.”
ESG ratings have faced multiple problems with the consistency of their methodologies and perceived conflicts of interest. The ESG Ratings Regulation attempts to tackle these issues. If successful in the EU, we could see other markets adopt similar rules for ESG raters.
Our members can learn more about ESG ratings here.
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