The European Council has adopted new regulation on EU ESG ratings aimed at making them more consistent, transparent and comparable.

The EC says the new rules aim to strengthen the reliability and comparability of ESG ratings by improving the transparency and integrity of the operations that ESG ratings providers carry out and by preventing potential conflicts of interest.

ESG rating providers established in the Union will need to be authorised and supervised by the European Securities and Markets Authority (ESMA). They will have to comply with transparency requirements, in particular with regard to their methodology and sources of information. ESG rating providers established outside the Union that wish to operate in the Union, will need to obtain an endorsement of their ESG ratings by an EU authorised ESG rating provider.

The regulation will be published in the EU’s Official Journal and enter into force 20 days later. The regulation will start applying 18 months after its entry into force.

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