ESMA, the EU securities watchdog, has today launched a call for information about the market structure for ESG rating providers in the EU.
The call for evidence is separate from, but intended to complement, a consultation due to be launched by the European Commission.
The aim of ESMA’s project is to develop a picture of the size, structure, resourcing, revenues and product offerings of the different ESG rating providers in the EU.
The regulator also said it wanted to complement this picture by collecting views and experiences from the users of the ESG rating providers, as well as those entities covered by the providers.
The anticipated consultation from the Commission will, according to ESMA, seek stakeholder views on the use of ESG ratings by market participants and on the functioning and dynamics of the market.
Today’s move from ESMA comes after it warned the Commission in January 2021 about potential risks stemming from the unregulated nature of ESG ratings and data assessments. This in turn followed a joint call for ESG ratings regulation from the Dutch and French regulators.
In November, IOSCO, the international umbrella forum for securities regulators, recommended regulators pay closer attention to use of ESG ratings and data products and the activities of their providers to potentially boost trust.
In its response to IOSCO’s consultation, the Principles for Responsible Investment said it generally welcomed increased attention by regulators to the market for ESG ratings and data products and the providers of these products, but recommended that regulators focus on improving transparency and ensuring appropriate governance arrangements.
As part of its new sustainable finance strategy, published in July last year, the Commission pledged action to improve the reliability, comparability and transparency of ESG ratings.
ESMA said the Commission’s public consultation was intended to gather information on the issue, with a view to developing an impact assessment on the costs and options of a possible EU intervention.
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