Photo source: https://www.esma.europa.eu/

The European Securities and Markets Authority (ESMA) has released draft Regulatory Technical Standards (RTS) under the EU’s ESG Rating Regulation, aiming to enhance the reliability, transparency, and comparability of ESG ratings. These proposed rules require ESG ratings providers to obtain authorization from ESMA, implement safeguards against conflicts of interest, and disclose methodologies, models, and key rating assumptions used in deriving ESG ratings. The regulation also mandates that providers establish separate organizational structures for ESG ratings and other services to prevent conflicts of interest.

ESMA has initiated a consultation on the proposed rules, open until June 20, 2025, and plans to publish a final report and submit the draft RTS to the European Commission for adoption in October 2025. These measures are part of the EU’s broader efforts to strengthen sustainable finance by ensuring that ESG ratings are trustworthy and comparable.