F.R.| The European Council will soon start negotiations to take forward the new EU regulation on ESG rating providers, which already has a proposal for a Regulation on the transparency and integrity of environmental, social and governance rating activities published in June 2023. The purpose of this new regulation is to “strengthen the reliability and comparability of ESG ratings by improving the transparency and integrity of ESG rating providers’ operations, making ratings more comparable and preventing potential conflicts of interest.”
Under the proposed rule, ESG rating providers will have to be authorised and supervised by the European Securities and Markets Authority (ESMA) and comply with transparency requirements, in particular with regard to their methodology and sources of information. Providers will also be subject to specific measures to prevent and manage conflicts of interest. A lighter, temporary and optional three-year registration regime is also introduced for existing small ESG rating providers and new entrants to small markets.
