ESG ratings agencies need greater supervision to avoid greenwashing, EMSA has said.

Steven Maijoor, chair of the European Securities and Markets Authority (ESMA) described the supervision of ESG ratings was “far from optimal” in a speech yesterday. He added, “the lack of clarity on the methodologies underpinning those scoring mechanisms and their diversity does not contribute to enabling investors to effectively compare investments which are marketed as sustainable, thus contributing to the risk of greenwashing. Personally I believe that, where ESG ratings are used for investment purposes, ESG rating agencies should be regulated and supervised appropriately by public sector authorities.”

Maijoor said ESMA will launch a public consultation next month on specific disclosure requirements it will consider.