The European Securities and Markets Authority (ESMA) has published a Consultation Paper outlining draft Regulatory Technical Standards (RTS) under the EU’s ESG Rating Regulation, marking a key step in shaping the regulatory framework for environmental, social and governance (ESG) rating providers.
The proposed RTS set out detailed requirements in three key areas:
- Application requirements for authorisation and recognition of ESG rating providers.
- Conflict of interest safeguards, particularly for providers engaged in additional activities beyond issuing ESG ratings.
- Disclosure obligations to the public, rated entities, and users of ESG ratings.
The standards aim to enhance transparency, accountability, and the overall reliability of ESG ratings used across financial markets.
ESMA has invited stakeholders, particularly prospective ESG rating providers, financial market participants, users of ESG ratings, and rated entities, to submit feedback by 20 June 2025. A final report, incorporating the consultation responses, is expected in October 2025, when ESMA plans to submit the draft RTS to the European Commission for adoption.
The initiative follows broader EU efforts to regulate ESG data and improve the quality and consistency of sustainability-related assessments in financial decision-making.
