The European Securities and Markets Authority (ESMA) has launched a call for information about the market structure for environmental, social and governance (ESG) rating providers in the European Union.
In
a statement, the watchdog said it is looking for “evidence to develop a picture of the size, structure, resourcing, revenues and product offerings of the different ESG rating providers operating in the EU,” the European Securities and Markets Authority (ESMA) said in a statement.
It added that it wanted to “complement this picture by collecting views and experiences from the users of these ESG rating providers, as well as those entities covered by ESG rating
The call for evidence intends to build upon a separate consultation to be launched by the European Commission (EC), that will seek stakeholder views on the use of ESG ratings by market participants and the functioning and dynamics of the market.
The ratings agencies have been under scrutiny in the past and last January the regulator warned the Commission about potential risks stemming from the unregulated nature of ESG ratings and data assessments.
This in turn followed a joint call for ESG ratings regulation from the Dutch and French regulators.
In November, IOSCO, the international umbrella forum for securities regulators, recommended regulators pay closer attention to use of ESG ratings and data products and the activities of their providers to potentially boost trust.
In its response to IOSCO’s consultation, the Principles for Responsible Investment said it generally welcomed increased attention by regulators to the market for ESG ratings and data products and the providers of these products but recommended that regulators focus on improving transparency and ensuring appropriate governance arrangements.
As part of its new sustainable finance strategy, published in July last year, the Commission pledged action to improve the reliability, comparability and transparency of ESG ratings.
ESMA said the Commission’s public consultation was intended to gather information on the issue, with a view to developing an impact assessment on the costs and options of a possible EU intervention.
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