ERT issue an Expert Paper on the ESG Ratings

Brussels, 16 October 2023: The latest call for evidence (June 2022) of the European Securities and Markets Authority (ESMA) confirmed that the market of ESG rating providers is very fragmented, with 59 providers being active in the EU. This fragmentation and proliferation results in a significant degree of heterogeneity in practices and methodologies as well as a low degree of comparability.

ERT also acknowledges, in line with the findings from the public consultation, that over the last few years there have been several mergers and acquisitions within the ESG rating market. This has led to a skewed structure of the market with a small number of very large entities on one hand, and many very small sized entities on the other hand. We notice that most of the larger ESG rating providers with a significant market share are entities based outside of the EU.

In this ERT Expert Paper we comment on the Proposal for a Regulation of the European Parliament and of the Council on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities.

We appreciate that many of the key findings of the public consultation as well as concerns from the real economy have been reflected in the proposal. Additionally, we also want to provide our thoughts on further ambitions that drive the more transparent inclusion of sustainability aspects in credit ratings.