The EU Parliament has adopted a legislative proposal to make ESG ratings more reliable and comparable. The aim is to boost investor confidence in sustainable products. For the first time, the legislation sets transparency and integrity requirements for ESG rating activities. Rating agencies are required to disclose the methodologies used for ESG ratings. It must also be disclosed whether field research was carried out for a rating. Legal protection for rated companies will be strengthened. CRAs must deal promptly and fairly with complaints from companies about, for example, the data sources used or the application of rating methodologies. The ESG Rating Regulation also introduces the principle of separation of ESG rating activities from other activities (such as audit and advisory services). This strict separation is intended to avoid potential conflicts of interest.
