ESG: Client note on the ESG Ratings Regulation

The EU’s ESG Ratings Regulation was published in the Official Journal on 12 December 2024.

This starts the clock running on the implementation timetable - the Regulation applies from 2 July 2026.

Under the new Regulation, EU ESG rating providers will have to apply to ESMA for authorisation and, among other things, will be

• subject to general principles concerning their governance and methodological approach
• prohibited from carrying out certain financial services activities (such as issuing credit ratings)
• required to ensure that individuals directly involved in the provision of ESG ratings comply with specified independence requirements
• required to make disclosures concerning their ESG rating activities to the public and to subscribers of ESG ratings and rated entities and
• expected to have processes in place to prevent and manage conflicts of interest.

Our client Briefing Note summarises the Top 10 things that providers of ESG ratings need to know about these important new rules.

This is relevant both to

• firms which provide ESG ratings as a standalone business and
• firms which provide ESG ratings as part of other products or services, including investment firms and asset managers.