Stockholm (NordSIP) – The European Securities and Markets Authority (ESMA) has opened a public consultation on how best to regulate the market for Environmental, Social and Governance (ESG) ratings provision. ESMA, the EU’s financial markets regulator and supervisor, is inviting responses to a newly published consultation paper. The deadline for submissions is 20 June 2025.
ESMA would like to get the views not only of financial market participants that typically use ESG ratings but also of organisations that intend to apply for approval as ratings providers. The background to the current consultation involves the November 2024 publication in the Official Journal of the European Union (OJEU) of proposed regulation on the transparency and integrity of ESG rating activities. The regulation will need to be supported by technical standards for the authorisation, recognition, and separation of the activities under scrutiny. It is for these that the ESMA is calling for feedback.
Interested parties are invited to read the consultation paper and provide feedback on three key considerations:
1. What information should be provided when applying to be an authorised ESG ratings provider.
2. The measures and safeguards to put in place to mitigate the risks of conflicts of interest.
3. Suggestions of disclosure requirements to help ensure comparability and consistency between ratings providers.
Examples of activities leading to potential conflicts of interest for ESG ratings providers include investment consultancy, the issuance of credit ratings, and the provision of benchmarks. ESMA stipulates that any ‘Chinese Wall’ mitigation measures should involve genuine physical and operational segregation of business divisions.
As well as prospective and current users of ESG ratings, ESMA is keen to invite views from ratings providers. It is especially keen to get responses from entities that intend to apply for registration as external reviewers of European Green Bonds, as well as financial market participants who have or intend to issue or invest in green bonds or sustainability-linked bonds.
The consultation paper along with the standard reply form can be downloaded from ESMA via this link. Once all the responses have been received by the 20 June deadline, ESMA will incorporate these into a final draft of technical standards for submission to the European Commission before 2 October 2025. ESMA is also calling for views on external reviewers of green bonds in a consultation that ends on 30 May 2025.
