Eurosif on the ESG Ratings Market

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© Cameron Venti

|Eurosif informed about the key points of the response to the European Commission, responding to the public consultation on the functioning of the ESG ratings market in the EU and on the consideration of ESG Factors in credit ratings [link].

Eurosif’s position key points:

  • The main objective of any regulatory intervention should be to bring more transparency and robustness on the ESG ratings provided to the market. Seeking to achieve full comparability and correlation between ratings should not be the stated aim of any regulatory intervention.
  • While more transparency on ESG ratings‘ methodologies would be welcome, they will inevitably differ. In that sense, we would caution against any idea that ESG ratings should or will become mainstream for retail investors. 
  • Any regulatory intervention should introduce strong transparency requirements about the monitoring and managing of actual and potential conflicts of interests. 
  • We would urge the European Commission, together with the European Supervisory Authorities (ESAs), to monitor developments around data-related services, their quality, and evaluate – after the adoption of mandatory corporate sustainability reporting frameworks – whether dedicated regulatory frameworks for a broader range of data services may be necessary.
  • Finally, any regulatory intervention through a new legislative framework should focus on ESG ratings provided by data providers and made available for sale to third parties.The framework should not seek to capture ESG assessment by asset managers or asset owners that are providing an overlay on ratings by third-party providers.

More information on Eurosif’s position

 

All opinions expressed are those of the author. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.