Activities of Rasmus ANDRESEN related to 2023/0177(COD)
Shadow reports (1)
REPORT 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
Amendments (90)
Amendment 99 #
Proposal for a regulation
Citation 1
Citation 1
Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114s 9, 114, 191 and 192 thereof,
Amendment 100 #
Proposal for a regulation
Recital 1
Recital 1
(1) On 25 September 2015, the UN General Assembly adopted a new global sustainable development framework: the 2030 Agenda for Sustainable Development17 , having at its core the Sustainable Development Goals (SDGs). The Commission's Communication of 2016 on the next steps for a sustainable European future18 links the SDGs to the Union policy framework to ensure that all Union actions and policy initiatives, within the Union and globally, take the SDGs on board at the outset. The European Council conclusions of 20 June 201719 confirmed the commitment of the Union and the Member States to the implementation of the 2030 Agenda in a full, coherent, comprehensive, integrated and effective manner and in close cooperation with partners and other stakeholders. On 11 December 2019, the Commission published its communication on ‘The European Green Deal’20 . On 30 June 2021, the Council of the European Union and the European Parliament agreed on the European Climate Law which enshrines into law the goal set out in the European Green Deal for Europe's economy and society to become climate- neutral by 2050. _________________ 17 Transforming our World: The 2030 Agenda for Sustainable Development (UN 2015). 18 COM(2016) 739 final. 19 CO EUR 17, CONCL. 5. 20 Communication from the Commission of 11 December 2019 on the European Green Deal, COM(2019) 640 final.
Amendment 106 #
Proposal for a regulation
Recital 5
Recital 5
(5) Financial markets have a crucial role in the channelling of capital toward investments necessary for the achievement of the EU climate and environmental objectives. In March 2018, the Commission published its Action Plan 'Financing Sustainable Growth'22 , setting up its strategy on sustainable finance. The objectives of that Action Plan are to mainstream sustainability factors into risk management and reorient capital flows towards sustainable investment to achieve sustainable and inclusive growth. _________________ 22 European Commission, Action Plan: Financing Sustainable Growth, COM(2018) 97 final.
Amendment 108 #
Proposal for a regulation
Recital 8
Recital 8
(8) As a follow-up, the Commission announced in the renewed sustainable finance strategy, a public consultation on ESG ratings to feed into an impact assessment. In the public consultation that took place in 2022, stakeholders confirmed concerns with the lack of transparency of ESG ratings methodologies and objectives and clarity over ESG rating activities. As trust is pivotal in the functioning of financial markets, this lack of transparency and reliability of ESG ratings should be addressed urgently.
Amendment 109 #
Proposal for a regulation
Recital 8 a (new)
Recital 8 a (new)
Amendment 112 #
Proposal for a regulation
Recital 10
Recital 10
(10) ESG ratings play an important role in global capital markets, as investors, borrowers and issuers increasingly use those ESG ratings as part of making informed, sustainable investment and financing decisions. Credit institutions, investment firms, insurance undertakings, assurance undertakings, and reinsurance undertakings, amongst others, often use those ESG ratings as a reference for the sustainability performance or for the sustainability risks and opportunities in their investment activity. Consequently, ESG ratings have a significant impact on the operation of the markets and on the trust and confidence of investors and consumers. To ensure that ESG ratings used in the Union are independent, objective, comparable and of adequate quality, it is important that ESG rating activities are conducted in accordance with the principles of integrity, transparency, responsibility, and good governance and are elaborated in accordance with minimum standards. Better comparability and increased reliability of ESG ratings would enhance the efficiency of that fast-growing market, thereby facilitating progress towards the objectives of the Green Deal.
Amendment 118 #
Proposal for a regulation
Recital 15
Recital 15
(15) Rules on ESG rating providers should not apply to private ESG ratings produced pursuant to an individual order and provided exclusively to the person who placed the order and which are not intended for public disclosure or distribution by subscription or other means. Neither should such rules apply to ESG ratings produced by European financial undertakings that are used exclusively for internal purposes. ESMA should develop draft regulatory standards to strictly deliminate what constitutes an internal use. To preserve the level playing field, ESMA should ensure that the exclusion does not apply to ESG ratings provided by a financial undertaking to other parties, including parties belonging to the same group. ESG ratings developed by European or national authorities and by central banks should also be exempted from such rules. Likewise, this Regulation should not apply to non-profit civil society organisations or academics or journalists putting together scoreboards or rankings for non-commercial purposes, which represent a non-significant part of their overall activities. Finally, such rules should not apply to the provision of ESG data that do not include an element of rating or scoring and are not subject to any modelling or analysis resulting in the development of an ESG rating.
Amendment 122 #
Proposal for a regulation
Recital 16
Recital 16
(16) It is important to lay down rules ensuring that ESG ratings provided by ESG rating providers authorised in the Union are of adequate quality, are subject to appropriate requirements and ensure market integrity. Those rules would apply to overall ESG ratings capturing Environmental, Social and Governance factors, and to ratings that are only looking at a single Environmental, Social or Governance factor or sub-component of that factor. When providing aggregated ratings, the ESG ratings providers should disclose and justify the rate and the weight granted to each component (E, S and G), taking into account that each component should receive a minimum weight of 20%.
Amendment 126 #
Proposal for a regulation
Recital 17
Recital 17
(17) Given the use of ESG ratings from providers located outside the Union, it is necessary to introduce requirements based on which third-country ESG rating providers may offer their services in the Union. This is necessary to ensure market integrity, investor protection and proper enforcement. Therefore, threewo possible regimes are proposed for those third countries ESG rating providers: equivalence, and endorsement and recognition. As an overarching principle, supervision and regulation in a third country should be equivalent to Union supervision and regulation of ESG ratings. Therefore, ESG ratings provided by an ESG rating provider located in a third country can only be offered in the Union where a positive decision on equivalence of the third- country regime has been taken by the Commission. However, to avoid any adverse impact resulting from a possible abrupt cessation of the offering in the Union of ESG ratings provided by a third country ESG rating provider, it is also necessary to provide for certain other mechanisms, that is endorsement and recognition. Any ESG rating provider with a group structure should be able to use the mechanism of endorsement for the ESG ratings developed outside the Union, provided they establish, within the group, an authorised ESG rating provider in the Union. Smaller ESG rating providers, within the meaning of the maximum threshold of net turnover to define small undertakings in Directive 2013/34/EU26 , that generally do not belong to a group, and may not have the means to have a legal entity authorised in the Union, should be able to continue or start offering their services in the Union and should therefore benefit from a lighter regime, that is recognition. Where the third country ESG provider is subject to supervision, appropriate cooperation arrangements should be put in place in order to ensure the proper exchange of information with the relevant competent authority of the third country. _________________ 26 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).
Amendment 129 #
Proposal for a regulation
Recital 20
Recital 20
(20) To ensure the quality and reliability of ESG ratings, ESG rating providers should use rating methodologies that are rigorous, systematic, objective, continuous and subject to validation. ESG rating providers should review ESG ratings methodologies on an on-going basis and at least annually. Therefore, these methodologies should be developed in accordance with the minimum requirements set out in this Regulation. As a matter of principle, an ESG rating should always address the material impact of the rated entity on the environment and society in general. ESG rating providers should review ESG ratings methodologies on an on-going basis and at least annually, including to take into account European and International developments affecting the E, S and/or G factors.
Amendment 133 #
Proposal for a regulation
Recital 20 a (new)
Recital 20 a (new)
(20 a) Taking into account the Union objectives and international standards for each factor is a prerequisite to ensure a sufficient level of quality of ESG ratings. As such, for the “E” factor, ESG ratings providers should ensure that the rated entity’s activities are aligned with the objectives set in the Paris agreement.
Amendment 138 #
Proposal for a regulation
Recital 21
Recital 21
(21) To ensure a higher-level transparency, ESG rating providers should disclose information to the public on the methodologies, models and key rating assumptions which those providers use in their ESG rating activities and in each of their ESG ratings product. In light of the uses of ESG ratings by investors, the rating products should explicitly disclose which dimension of the double materiality the rating addresses, whether it ithe rating addresses both material financial risk to the rated entity and the material impact of the rated entity on the environment and society in general or whether it takes into account only one of themthe material impact of the rated entity on the environment and society in general. They should also explicitly disclose whether the rating addresses other dimensions. For the same reason, ESG rating providers should provide more detailed information on the methodologies, models and key rating assumptions to subscribers of ESG ratings. That information should enable users of ESG ratings to perform their own due diligence when assessing whether to rely or not on those ESG ratings. Disclosure of information concerning models should however not reveal sensitive business information or impede innovation.
Amendment 146 #
Proposal for a regulation
Article 1 – paragraph 1
Article 1 – paragraph 1
This Regulation introduces a common regulatory approach to enhance the integrity, comparability, transparency, responsibility, good governance, and independence of ESG rating activities, contributing to the transparencreliability and quality of ESG ratings. It aims to contribute to the smooth functioning of the internal market, while achieving a high level of consumer and investor protection and preventing greenwashing or other types of misinformation, including social-washing, by introducing transparency and minimum requirements related to ESG ratings and rules on the organisation and conduct of ESG rating providers.
Amendment 158 #
Proposal for a regulation
Article 2 – paragraph 2 – point b
Article 2 – paragraph 2 – point b
(b) ESG ratings produced by regulated financial undertakings in the Union that are used exclusively for internal purposes or for providing in-house financial services and products;
Amendment 179 #
Proposal for a regulation
Article 2 – paragraph 2 – point i – introductory part
Article 2 – paragraph 2 – point i – introductory part
(i) ESG ratings produced by central banks that fulfil all of the following conditions:members of the European System of Central Banks (ESCB);
Amendment 181 #
Proposal for a regulation
Article 2 – paragraph 2 – point i – point a
Article 2 – paragraph 2 – point i – point a
Amendment 182 #
Proposal for a regulation
Article 2 – paragraph 2 – point i – point b
Article 2 – paragraph 2 – point i – point b
Amendment 184 #
Proposal for a regulation
Article 2 – paragraph 2 – point i – point c
Article 2 – paragraph 2 – point i – point c
Amendment 186 #
Proposal for a regulation
Article 2 – paragraph 2 – point i – point d
Article 2 – paragraph 2 – point i – point d
Amendment 189 #
Proposal for a regulation
Article 2 – paragraph 2 – point i a (new)
Article 2 – paragraph 2 – point i a (new)
(ia) non-profit civil society organisations or academics or journalists putting together scoreboards or rankings for non-commercial purposes, which represent a non-significant part of their overall activities.
Amendment 196 #
Proposal for a regulation
Article 2 – paragraph 2 a (new)
Article 2 – paragraph 2 a (new)
Amendment 199 #
Proposal for a regulation
Article 3 – paragraph 1 – point 1
Article 3 – paragraph 1 – point 1
(1) ‘ESG rating’ means an opinion, a score or a combination of both, regarding an entity, a financial instrument, a financial product, or an undertaking’s ESG profile or characteristics or exposure to ESG risks or the impact on people, society and the environment, that are based on an established and transparent methodology and defined ranking system of rating categories and that are provided to third parties, irrespective of whether such ESG rating is explicitly labelled as ‘rating’ or ‘ESG score’;
Amendment 216 #
Proposal for a regulation
Article 3 – paragraph 1 – point 9 a (new)
Article 3 – paragraph 1 – point 9 a (new)
(9a) ‘management body’ means the body or bodies of an ESG rating provider which are empowered to define the ESG rating provider’s strategy and objectives, and responsible for overseeing and monitoring the ESG rating provider’s activities.
Amendment 218 #
(10) ‘senior management’ means the person or persons who effectively directrun the business of the ESG rating provider and the member or members of the ESG rating provider’s administrative or supervisory board.
Amendment 223 #
Proposal for a regulation
Article 4 – paragraph 1 – point d
Article 4 – paragraph 1 – point d
Amendment 227 #
Proposal for a regulation
Article 5 – paragraph 3 – subparagraph 2
Article 5 – paragraph 3 – subparagraph 2
ESMA shall submit those draft regulatory technical standards to the Commission by XX XXXX XXXX[9 months after the entry into force of this Regulation].
Amendment 232 #
1. Within 320 working days of receipt of the application referred to in Article 5(2), ESMA shall assess whether the application is complete. Where the application is not complete, ESMA shall set a deadline by which the applicant is to provide additional information.
Amendment 233 #
Proposal for a regulation
Article 6 – paragraph 3
Article 6 – paragraph 3
3. Within 12045 working days of the notification referred to in paragraph 2, ESMA shall adopt a fully reasoned decision to authorise or refuse authorisation.
Amendment 235 #
Proposal for a regulation
Article 6 – paragraph 4 – introductory part
Article 6 – paragraph 4 – introductory part
4. ESMA may extend the period referred to in the paragraph 3 to 140by 15 working days in particular where the applicant:
Amendment 245 #
Proposal for a regulation
Article 9 – paragraph 1 – point a
Article 9 – paragraph 1 – point a
(a) the third country ESG rating provider is a legal person, is authorised or registered as an ESG rating provider in the third country concerned, and is subject to supervision by that third country;
Amendment 246 #
Proposal for a regulation
Article 9 – paragraph 1 – point d a (new)
Article 9 – paragraph 1 – point d a (new)
(da) establishment in the EU would be disproportionate to the nature, scale and complexity of the ESG rating providers' ESG rating activities in the EU;
Amendment 248 #
(db) the third country ESG ratings provider has been authorised by ESMA in accordance with Article 5.
Amendment 252 #
Proposal for a regulation
Article 9 – paragraph 2 – subparagraph 2
Article 9 – paragraph 2 – subparagraph 2
Amendment 256 #
Proposal for a regulation
Article 9 – paragraph 4 – point a
Article 9 – paragraph 4 – point a
(a) the mechanism for exchanging information on a regular and ad-hoc basis between ESMA and the competent authorities of third countries concerned, including access to all relevant information requested by ESMA regarding the ESG rating provider authorised or registered in that third country;
Amendment 263 #
Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 1 – point e
Article 10 – paragraph 1 – subparagraph 1 – point e
(e) the ESG rating provider located in the Union provides ESMA at its request with all the information necessary to enable ESMA to supervise the compliance by the third country ESG rating provider with this Regulation on an ongoing basis, in accordance with Article 30;
Amendment 266 #
Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 2
Article 10 – paragraph 1 – subparagraph 2
For the purposes of point (b) of the first subparagraph, ESMA may considershall assess that compliance of the provision of the ESG rating to be endorsed with the IOSCO recommendations for ESG ratings is equivalent to compliance with the s with the requirements of this Regulation.
Amendment 271 #
Proposal for a regulation
Article 10 – paragraph 3
Article 10 – paragraph 3
3. Within 30 working days of receipt of the application for endorsement referred to in paragraph 1, ESMA shall assess whether the application is complete. When the application is not complete, ESMA shall notify the ESG rating provider and shall set a deadline by which the applicant must complete its application. ESMA shall refuse the authorisation where the ESG rating provider fails to complete its application within the deadline. Within 90 working days of receipt of the application for endorsement referred to in paragraph 1, ESMA shall examine the application and decide either to authorise the endorsement or to refuse it. ESMA shall publicly notify the decision to endorse provided by a third country ESG rating provider.
Amendment 277 #
Proposal for a regulation
Article 11
Article 11
Amendment 285 #
Proposal for a regulation
Article 12 – paragraph 1
Article 12 – paragraph 1
1. Any cooperation arrangement as referred to in Article 9(4), Article 10(1), point (f) and Article 11(50(1), point (b),f) shall be subject to guarantees of professional secrecy which are at least equivalent to those set out in Article 44. The exchange of information performed under such cooperation arrangements shall be intended for the performance of the tasks of ESMA or the competent authorities.
Amendment 293 #
Proposal for a regulation
Article 14 – paragraph 7
Article 14 – paragraph 7
7. ESG rating providers shall use rating methodologies for the ESG ratings they provide that are rigorous, systematic, objective and capable of validation and, in accordance with the requirements defined in Title III Chapter 1a of this Regulation. They shall apply those rating methodologies continuously.
Amendment 302 #
Proposal for a regulation
Article 14 – paragraph 11
Article 14 – paragraph 11
11. ESG rating providers shall adopt, implement, and enforce measures to ensure that their ESG ratings are based on a thorough analysis of all the information that is available to them and that is relevant to their analysis in accordance with their rating methodologies and the requirements laid down in Title III Chapter 1a of this Regulation. They shall adopt all necessary measures to ensure that the information they use in assigning ESG ratings is of sufficient quality and from reliable sources. ESG rating providers shall explicitly mention that their ESG ratings are their own opinion .
Amendment 303 #
Proposal for a regulation
Article 14 – paragraph 12
Article 14 – paragraph 12
12. ESG rating providers shall not disclose information related to the rated entities about their intellectual capital, intellectual property, know-how or the results of innovation that would qualify as trade secrets as defined in Article 2, point (1), of Directive (EU) 2016/943 of the European Parliament and of the Council52 . _________________ 52 Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ L 157, 15.6.2016, p. 1).
Amendment 306 #
Proposal for a regulation
Article 14 a (new)
Article 14 a (new)
Article14a Organisational requirements, governance and processes 1. An ESG rating provider shall have a management body that has the ultimate responsibility for the compliance of the ESG rating provider with the provisions of this Regulation. The management body shall in particular : (a) assess and adapt the ESG rating provider's strategy in accordance with its ESG rating objectives; (b) ensure that conflicts of interests are properly identified, removed or managed and disclosed; (c) verify that the policies, written procedures and the rating methodology comply with the requirements of this Regulation and are regularly reviewed. 2. An ESG rating provider shall establish and maintain a permanent and independent compliance function for the activities performed under this Regulation. It shall have the necessary resources and expertise and have access to all the information necessary to perform its function. 3. An ESG rating provider shall establish and maintain a permanent oversight function to monitor all aspects of the provision of ESG ratings. The oversight function shall at least: (a) regularly review the ESG rating methodology, including models and key assumptions; (b) verify that the ESG ratings are based on reliable data and of sufficient quality; (c) monitor the implementation of identified remedial actions. 4. The compliance function referred to in paragraph 2 and and the oversight function referred to in paragraph 3 shall have direct access to the management body of the ESG rating provider.
Amendment 314 #
Proposal for a regulation
Article 15 – paragraph 1 – point a
Article 15 – paragraph 1 – point a
(a) consulting activities to investors or, financial or non-financial undertakings;
Amendment 318 #
Proposal for a regulation
Article 15 – paragraph 1 – point b
Article 15 – paragraph 1 – point b
(b) the issuance and saledistribution of credit ratings;
Amendment 328 #
Proposal for a regulation
Article 15 – paragraph 1 – point f a (new)
Article 15 – paragraph 1 – point f a (new)
(fa) ESG ratings for entities which belong to the same group as the ESG rating provider.
Amendment 332 #
Proposal for a regulation
Article 15 – paragraph 2 a (new)
Article 15 – paragraph 2 a (new)
2a. For the purposes of ensuring sufficient and harmonised safeguards for the provision of other services in accordance with paragraph 2, ESMA shall develop draft implementing technical standards to specify under which conditions ESG rating providers could provide such services. ESMA shall submit those draft implementing technical standards to the Commission by [12 months after the entry into force of this Regulation]. Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Amendment 337 #
Proposal for a regulation
Article 16 – paragraph 3
Article 16 – paragraph 3
3. The persons referred to staff of the ESG rating paragraph 1rovider shall not buy or sell any financial instrument issued, guaranteed, or otherwise supported by any rated entity other than holdings in diversified collective investment schemes, including managed funds, nor engage in any transaction in such financial instruments.
Amendment 338 #
Proposal for a regulation
Article 16 – paragraph 4 – point c
Article 16 – paragraph 4 – point c
(c) have had a recent, over the last 3 years, an employment, business or other relationship with the rated entity or any entity within the group of the rated entity that may cause or may be generally perceived as causing a conflict of interest.
Amendment 339 #
Proposal for a regulation
Article 16 – paragraph 5 – introductory part
Article 16 – paragraph 5 – introductory part
5. ESG rating providers shall ensure that the persons referred to in paragraph 1members of its staff:
Amendment 341 #
Proposal for a regulation
Article 16 – paragraph 8
Article 16 – paragraph 8
8. Persons as referred to in paragraph 1 as well as persons occupying a senior management position in the ESG rating provider shall not take up a key management position within a rated entity which they have been involved in rating for six months after the provision of such rating.
Amendment 347 #
Proposal for a regulation
Article 17 – paragraph 1
Article 17 – paragraph 1
1. ESG rating providers shall record their ESG rating activities. Those records shall contain the information listed in Annexes I and II.
Amendment 348 #
Proposal for a regulation
Article 17 – paragraph 1 a (new)
Article 17 – paragraph 1 a (new)
1a. ESG rating providers shall keep record of key rating-related information, including rating, the rated legal entity or financial instrument, the rating type, the horizon or outlook used for the rating, the rating status and make this information available upon request to competent authorities in charge of the supervision of the regulated financial undertakings in the Union.
Amendment 349 #
Proposal for a regulation
Article 17 – paragraph 2 a (new)
Article 17 – paragraph 2 a (new)
Amendment 363 #
Proposal for a regulation
Article 19 – paragraph 3 a (new)
Article 19 – paragraph 3 a (new)
3a. ESG rating providers that outsource functions or any services or activities must not transmit confidential data or information related to rated entities unless rated entities have expressly consented to the transmission of such data or information.
Amendment 365 #
Proposal for a regulation
Article 20 – paragraph 1 – introductory part
Article 20 – paragraph 1 – introductory part
1. ESMA may exempt an ESG rating provider at its request from complying with some of the organisational requirements laid down in Article 14a (2) and (3) where that ESG rating provider is able to demonstrate that those requirements are not proportionate in view of the nature, scale and complexity of its business and the nature and range of the issuance of ESG ratings and provided that:
Amendment 366 #
Proposal for a regulation
Article 20 – paragraph 1 – point a
Article 20 – paragraph 1 – point a
(a) the ESG rating provider is a small or medium-sized undertaking according to the criteria laid down in Article 3 of Directive 2013/34/EU and is not part of a wider group;
Amendment 368 #
Proposal for a regulation
Article 20 – paragraph 2
Article 20 – paragraph 2
Amendment 370 #
Proposal for a regulation
Title III – Chapter 1 a (new)
Title III – Chapter 1 a (new)
1a CHAPTER 1a Minimum requirements on ESG ratings methodology Article 20a - Disaggregation of E, S and G components 1. ESG rating providers shall provide for each rated entity separate E, S and G ratings. 2. Notwithstanding paragraph 1, ESG rating providers can provide a single ESG rating that aggregates E, S and G factors provided that: (a) The weight attributed to each factor is clearly communicated to ESG rating subscribers and users; (b) An explanation of the weight attributed to each factor is provided to ESG rating subscribers and users; (c) Each factor shall be attributed a factor of at least 20%. Article 20b - Impact materiality requirement 1. All ESG ratings provided by ESG rating providers shall be based, at least partly, on the impact materiality of the rated entity or financial instrument on the environment and society. Ratings or scores based solely on the ability of an entity to withstand the risks posed by ESG factors do not qualify as ESG rating. 2. Where ESG rating providers factor in financial materiality assessment in their ESG ratings, they shall make sure that this dimension does not represent more than 25% of the rating. Article 20c - Minimum requirements for each factor 1. ESG rating providers shall ensure that their methodology for the "E" factor ensures at least alignment with the 1.5°C target set by the Paris agreement. Undertakings conducting or financing new fossil fuel projects shall receive a rating in the lowest rating category. 2. ESG rating providers shall ensure that their methodology for the "S" factor is at least aligned with the core International Labour Organization (ILO) standards and the UN Guiding Principles on Business and Human Rights. 3. ESG rating providers shall ensure that their methodology for the "G" factor is at least aligned with the G20/OECD Principles of Corporate Governance and the UN Convention Against Corruption. Undertakings convicted of money- laundering, terrorist financing or tax avoidance shall receive a rating in the lowest rating category.
Amendment 374 #
Proposal for a regulation
Article 21 – paragraph 1
Article 21 – paragraph 1
1. ESG rating providers shall disclose on their website, as a minimum, the methodologies, models and key rating assumptions they use in their ESG rating activities, including the information referred to in points d) and g) of Annex I and in point 1 of Annex III.
Amendment 379 #
Proposal for a regulation
Article 21 – paragraph 1 a (new)
Article 21 – paragraph 1 a (new)
Amendment 380 #
Proposal for a regulation
Article 21 – paragraph 1 b (new)
Article 21 – paragraph 1 b (new)
1b. ESG rating providers shall make use of the data enclosed in the Sustainable Finance Disclosure Regulation, the Taxonomy Regulation and the Corporate Sustainability Reporting Directive. These pieces of legislation represent landmark legislative initiatives to enhance the availability, quality and consistency of ESG requirements across the entire value chain of financial market participants.
Amendment 381 #
Proposal for a regulation
Article 21 – paragraph 3 – subparagraph 1
Article 21 – paragraph 3 – subparagraph 1
ESMA shall submit those draft regulatory technical standards to the Commission by XX XXXX XXXX[9 months after entry into force of this Regulation] .
Amendment 382 #
Proposal for a regulation
Article 21 – paragraph 3 a (new)
Article 21 – paragraph 3 a (new)
3a. ESMA shall also develop draft implementing technical standards to specify the formats and templates ESG rating providers shall use for the purposes set out in paragraph 1. ESMA shall submit those draft implementing technical standards to the Commission by [9 months after entry into force of this Regulation]. Power is delegated to the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with the procedure laid down in Article 15 of Regulation (EU) No 1095/2010.
Amendment 387 #
Proposal for a regulation
Article 22 – paragraph 3 – subparagraph 1
Article 22 – paragraph 3 – subparagraph 1
ESMA shall submit those draft regulatory technical standards to the Commission by XX XXXX XXXX[9 months after entry into force of this Regulation].
Amendment 388 #
Proposal for a regulation
Article 22 – paragraph 3 a (new)
Article 22 – paragraph 3 a (new)
Amendment 391 #
Proposal for a regulation
Article 22 a (new)
Article 22 a (new)
Article22a Errors in ESG rating methodologies Where a ESG rating provider becomes aware of errors in its rating methodologies or in their application it shall immediately: (a) notify those errors to ESMA and all affected rated entities explaining the impact on its ratings including the need to review issued ratings; (b) where errors have an impact on its ESG ratings, publish those errors on its website; (c) correct those errors in the rating methodologies; (d) review the affected ESG ratings as soon as possible and no later than six months after the change, in the meantime placing those ratings under observation; and (e) re-rate all ESG ratings that have been based on those methodologies, models or key rating assumptions if, following the review, the overall combined effect of the changes affects those ESG rating
Amendment 394 #
Proposal for a regulation
Article 23 – paragraph 2
Article 23 – paragraph 2
2. ESG rating providers shall take all necessary steps to ensure that any ESG rating provided is not affected by any existing or potential conflict of interest, or by any business relationship, either from the ESG rating provider itself or from their shareholders, managers, rating analysts, employees or any other natural person whose services are placed at the disposal or under the control of the ESG rating providers, or any person directly or indirectly linked to them by control or any third-party provider to whom functions or any services or activities have been outsourced.
Amendment 399 #
Proposal for a regulation
Article 23 – paragraph 3 – subparagraph 1
Article 23 – paragraph 3 – subparagraph 1
Where there is a risk of a conflict of interest within an ESG rating provider due to the ownership structure, controlling interests, or activities of that ESG rating provider, of any entity owning or controlling the ESG rating provider, of an entity that is owned or controlled by the ESG rating provider, or of any the ESG rating provider’s affiliates or third-party provider, ESMA may require the ESG rating provider to take measures to mitigate that risk. Such measures may include the establishment of an independent oversight function representing stakeholders, including users of the ESG ratings and, contributors to such ratings, trade unions, relevant civil society organisations and affected communities, in a balanced manner.
Amendment 400 #
Proposal for a regulation
Article 23 – paragraph 3 – subparagraph 2
Article 23 – paragraph 3 – subparagraph 2
Where athere is a risk of conflict of interest as referred to in the first subparagraph that cannot be adequately managed, ESMA mayshall require the ESG rating provider to cease the activities or relationships that create the conflict of interest, or mayshall require the ESG rating provider to cease providing the ESG ratings.
Amendment 426 #
Proposal for a regulation
Article 31 – paragraph 1 – point c
Article 31 – paragraph 1 – point c
(c) summon and ask any person referred to in Article 30(1),or their representatives or staff for oral or written explanations on facts or documents related to the subject matter and purpose of the inspecvestigation and to record the answers;
Amendment 428 #
Proposal for a regulation
Article 32 – paragraph 1
Article 32 – paragraph 1
1. In order to carry out its duties under this Regulation, ESMA may conduct all necessary on-site inspections at the business premises and land of the legal persons referred to in Article 30(1). Where the proper conduct and efficiency of the inspection so require, ESMA may carry out the on-site inspection without prior announcement.
Amendment 433 #
Proposal for a regulation
Article 33 – paragraph 3 – point f
Article 33 – paragraph 3 – point f
(f) the impact of the infringement on retail investors’ interests and on other ESG rating users;
Amendment 435 #
4 a. Where an ESG rating is provided upon material infringement of this Regulation, ESMA may require the infringing ESG rating provider to inform the ESG rating subscribers and users that the ESG rating is no longer valid. ESMA shall publish its decision on its website the day following the decision.
Amendment 437 #
Proposal for a regulation
Article 34 – paragraph 1
Article 34 – paragraph 1
1. Where ESMA finds that an ESG rating provider, or, where applicable, its legal representative, has, intentionally or negligently, infringed this Regulation, it shall adopt a decision imposing a fine. The maximum amount of the fine shall be 10 % of the total annual net turnover of the ESG rating provider, calculated on the basis of the most recent available financial statements approved by the management body of the ESG rating provider. An infringement shall be considered to have been committed intentionally if ESMA finds objective elements which demonstrate that a person acted deliberately to commit the infringement.
Amendment 448 #
Proposal for a regulation
Article 40 – paragraph 2 – subparagraph 2
Article 40 – paragraph 2 – subparagraph 2
By XX XXXX XXXX[12 months after the entry into force of this Regulation], the Commission shall adopt delegated acts in accordance with Article 45 to supplement this Regulation by specifying the type of fees, the matters for which fees are due, the amount of the fees, the manner in which they are to be paid and, where applicable, the way in which ESMA is to reimburse competent authorities in respect of any costs that they may have incurred carrying out work pursuant to this Regulation, in particular as a result of any delegation of tasks as referred to in Article 41.
Amendment 450 #
Proposal for a regulation
Article 42 – paragraph 1
Article 42 – paragraph 1
ESMA and the competent authorities, shall, without undue delay, provide each other with the information required for carrying out their duties under this Regulation or under their respective supervisory responsibility and mandates.
Amendment 460 #
Proposal for a regulation
Article 49 – paragraph 1
Article 49 – paragraph 1
1. The Commission shall evaluate the application of this Regulation by [fivetwo years after the entry into force of this Regulation].
Amendment 465 #
Proposal for a regulation
Article 49 – paragraph 2 a (new)
Article 49 – paragraph 2 a (new)
2 a. The report referred to in paragraph 2 shall in particular assess: (a) whether the scope of this Regulation is appropriate to achieve the objectives of this Regulation in accordance with Article 1, including whether ESG data providers should be included in the scope of this Regulation; (b) whether additional minimum requirements applicable to ESG rating methodologies should be implemented; (c) whether the framework for third- country ESG rating provider established by this Regulation is appropriate; (d) whether the governance and organisational requirements defined in Title III of this Regulation are sufficient to ensure independent, objective and high-level quality of ESG ratings.
Amendment 467 #
Proposal for a regulation
Article 49 a (new)
Article 49 a (new)
Article49a Amendment to Regulation (EC) No 1060/2009 The following subparagraph is inserted to Article 8(2) of Regulation 1060/2009: 'Where available, a credit rating agency shall take into account the ESG rating of the rated entity provided in accordance with [add reference to ESG rating Regulation] to define its credit rating.'
Amendment 471 #
Proposal for a regulation
Annex I – paragraph 1 – point g
Annex I – paragraph 1 – point g
(g) a detailed description of the procedures and methodologies used to issue and review ESG ratings implemented by the applicant. It should include a demonstration of the use of at least 50% of the common data points provided both under the Sustainable Finance Disclosure Regulation (SFDR), principal adverse impacts (PAIs) under the SFDR Delegated Regulation 2022/1288 and the Corporate Sustainability Reporting Directive (CSRD) Delegated Regulation (ESRS) as minimum quality thresholds;
Amendment 473 #
Proposal for a regulation
Annex I – paragraph 1 – point j a (new)
Annex I – paragraph 1 – point j a (new)
(ja) where applicable, existing track records of ESG rating activities;
Amendment 475 #
Proposal for a regulation
Annex I – paragraph 1 – point j b (new)
Annex I – paragraph 1 – point j b (new)
(j b) where applicable, the class of ESG ratings that the ESG rating provider expects to endorse.
Amendment 486 #
Proposal for a regulation
Annex III – Part 1 – paragraph 1 – point b a (new)
Annex III – Part 1 – paragraph 1 – point b a (new)
(ba) the relevant KPIs per E, S and G factor with their weighting method, the metrics that have been selected as relevant and data quality controls;
Amendment 487 #
Proposal for a regulation
Annex III – Part 1 – paragraph 1 – point c
Annex III – Part 1 – paragraph 1 – point c
(c) information on whether and how the methodologies are based on scientific evidence;
Amendment 488 #
Proposal for a regulation
Annex III – Part 1 – paragraph 1 – point c a (new)
Annex III – Part 1 – paragraph 1 – point c a (new)
(c a) whether and to which extent financial materiality is taken into account;
Amendment 502 #
Proposal for a regulation
Annex III – Part 2 – paragraph 1 – point a – point 1
Annex III – Part 2 – paragraph 1 – point a – point 1
(1) where applicable, scientific evidence and assumptions on which the ratings are based,
Amendment 505 #
Proposal for a regulation
Annex III – Part 2 – paragraph 1 – point a – point 6 a (new)
Annex III – Part 2 – paragraph 1 – point a – point 6 a (new)
(6a) any changes to rating methodologies, models, key rating assumptions or data sources (including estimates), reasons for these changes and their implications on ratings;
Amendment 506 #
Proposal for a regulation
Annex III – Part 2 – paragraph 1 – point a – point 7 a (new)
Annex III – Part 2 – paragraph 1 – point a – point 7 a (new)
(7a) any errors in its ESG rating methodologies or in their application.
Amendment 516 #
Proposal for a regulation
Annex III – Part 2 – paragraph 1 – point c a (new)
Annex III – Part 2 – paragraph 1 – point c a (new)
(ca) for “E” ratings, whether the rated entitiy activities are aligned with the requirement established by Regulation EU 2020/852 and its Delegated act, and where the rated entity receives a rating in the highest category while its activities are not aligned with the above mentioned Regulation a detailed justification.