Environmental, social and governance (ESG) ratings assess company’s or a financial instrument’s exposure to sustainability risk and its impact on society and the environment. As such, ESG ratings play a crucial role in building investor confidence in sustainable products and a broader operational capacity of capital markets. Addressing the issue of reliability, the Commission initiated a regulatory proposal in 2023 on ESG ratings with the aim of improving transparency and integrity of the operations of ESG ratings providers and preventing potential conflicts of interest.

Under the new regulatory framework, ESG rating providers will need to be authorised and supervised by ESMA and comply with transparency requirements, in particular with regard to their methodology and sources of information. A political deal between the co-legislators has been reached on the final text of the Regulation and its application is pending formal approval procedures by the European Parliament and the Council.

Deutsche Börse Group supports standardisation of ESG ratings and welcomes attempts to increase investor confidence in sustainable products.

For further information on Deutsche Börse Group’s positioning on the matter, find our statements and position papers under Publications.