Progress: Awaiting Council's 1st reading position
Role | Committee | Rapporteur | Shadows |
---|---|---|---|
Lead | ECON | LALUCQ Aurore ( S&D) | GARCÍA-MARGALLO Y MARFIL José Manuel ( EPP), KELLEHER Billy ( Renew), ANDRESEN Rasmus ( Verts/ALE), ROOKMAKER Dorien ( ECR), PAPADIMOULIS Dimitrios ( GUE/NGL) |
Committee Opinion | EMPL | ||
Committee Opinion | ENVI | ||
Committee Opinion | JURI | DURAND Pascal ( S&D) |
Lead committee dossier:
Legal Basis:
TFEU 114
Legal Basis:
TFEU 114Subjects
Events
The European Parliament adopted by 464 votes to 115, with 13 abstentions, a legislative resolution 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.
The European Parliament’s position adopted at first reading under the ordinary legislative procedure amends the proposal as follows:
Subject-matter and scope
This Regulation introduces a common regulatory approach to enhance the integrity, transparency, comparability where possible, responsibility, reliability, good governance, and independence of ESG rating activities, contributing to the transparency and quality of ESG ratings and to the sustainable finance agenda of the Union.
The Regulation is based on the concept of ‘ operating in the Union ’, distinguishing between cases where ESG rating providers are established within or outside the Union.
In the first case, providers established in the Union should be deemed to operate in the Union when they issue and publish their ESG ratings on their website or through other means, or when they issue and distribute their ESG ratings through subscription or other contractual relationships to regulated financial undertakings in the Union, to undertakings falling under the scope of Directive 2013/34/EU of the European Parliament and of the Council, to undertakings under the scope of Directive 2004/109/EC of the European Parliament and of the Council, in particular with respect to third-country issuers whose securities are admitted to trading on EU regulated markets, or to Union’s or Member States’ public authorities.
In the second case, providers established outside the Union should only be considered operating in the Union when they issue and distribute their ratings by subscription or other contractual relationships to the same entities as for ESG rating providers established in the Union.
Requirements to operate in the Union
Any legal person that wishes to operate as an ESG rating provider in the Union should be subject to any of the following: an authorisation issued by ESMA; an implementing decision; an authorisation for endorsement and a recognition. A temporary regime should be introduced to facilitate the market entry of smaller ESG rating providers and support the development of existing smaller ESG rating providers already operating in the Union before the entry into force of this Regulation.
Within 25 working days of receipt of the application, ESMA should assess whether the application is complete. After having assessed whether an application is complete, ESMA should notify the applicant of the result of that assessment. Within 90 working days of the notification, ESMA should adopt a fully reasoned decision to authorise or refuse authorisation. ESMA may extend the period to 120 working days.
Equivalence decision
An ESG rating provider established outside the Union that wishes to operate in the Union should only be able to do so where: (i) the provider is a legal person, is authorised or registered as an ESG rating provider in the third country concerned, and is subject to supervision in that third country; (ii) the provider has notified ESMA that it wishes operate in the Union and has submitted to ESMA the proof of the authorisation or registration. ESMA should establish cooperation arrangements with the competent authorities of third countries whose legal framework and supervisory practices have been recognised as equivalent.
An ESG rating provider established in the Union and authorised may endorse ESG ratings provided by an ESG rating provider established outside the Union and belonging to the same group, provided that all of the following conditions have been met:
- it has own premises or premises for its exclusive use in a Member State; it has at least one active bank account of its own in the Union; and it has appropriate analytical and decision-making presence in the Union considering the nature, scale or complexity of its activities in the Union;
- the ESG rating provider established in the Union has verified and is able to demonstrate on an on-going basis to ESMA that the issuance and distribution of endorsed ESG ratings fulfils requirements which are at least as stringent as the requirements of this Regulation;
- the ESG rating provider established in the Union has the necessary expertise to effectively monitor the ESG ratings by the ESG rating provider established outside the Union, to manage any associated risks.
Disclosure of the methodologies, models, and key rating assumptions used
ESG rating providers should disclose on their website, as a minimum, the methodologies, models and key rating assumptions they use in their ESG rating activities. Separate E, S and G ratings should be provided rather than a single ESG metric that aggregates E, S and G factors. ESG rating providers should provide the disclosures separately for each factor.
Complaints-handling mechanism
ESG rating providers should: (i) have in place and publish on their website procedures for receiving, investigating and retaining records concerning complaints made by users of ESG ratings, rated items and issuers of rated items; (ii) clearly provide information on their website about their complaints-handling mechanism and contact details; (iii) have in place procedures for receiving reasoned concerns by stakeholders.
Independence and avoidance of conflicts of interest
ESG rating providers should put in place robust governance arrangements. If there is a risk of a conflict of interest in an ESG rating provider, ESMA should take action. If a conflict of interest is not adequately managed through specific risk mitigation measures, ESMA should require the ESG rating provider to put an end to the breach.
ESMA
ESMA should publish annually on its website a list of ESG rating providers listed in the register, indicating their total market share in the Union. It may also take one or more supervisory measures towards any person operating in the Union.
The Committee on Economic and Monetary Affairs adopted the report by Aurore LALUCQ (S&D, FR) 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.
The committee responsible recommended that the European Parliament's position adopted at first reading under the ordinary legislative procedure should amend the proposal as follows:
Subject-matter and scope
The proposed Regulation introduces a common regulatory approach to enhance the integrity, transparency, comparability, responsibility, reliability, alignment with Union law, good governance, and independence of ESG rating activities, contributing to the transparency 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.
The rules relating to ESG rating providers should not apply to ESG ratings drawn up by European financial companies and used exclusively for internal purposes or shared within their group. The European Securities and Markets Authority (ESMA) should draw up draft regulatory standards to strictly delineate what constitutes internal use.
These rules should not apply to ratings issued by a member of the European System of Central Banks (ESCB).
Provision of ESG ratings in the Union
Any legal person who wishes to provide ESG ratings in the Union should be subject to either of the following: an authorisation issued by ESMA; an implementing decision; an authorisation for endorsement.
Recognition of third country ESG rating providers
Until the Commission has adopted an equivalence decision, third country ESG rating providers may provide ESG ratings to regulated financial undertakings in the Union, provided that ESMA has recognised that third country ESG rating provider.
A third country ESG rating provider recognised by ESMA should demonstrate that establishing a legal presence within the Union would be disproportionate to the nature, size and complexity of the third country ESG rating provider. ESMA should take into account whether the third country ESG rating provider belongs to a group. Third country ESG rating providers that wish to be recognised should have a legal representative .
Integrity and reliability of ESG rating activities
ESG rating providers should establish and maintain a permanent, independent and effective oversight function to ensure oversight overall aspects of the provision of their ESG ratings. The oversight function should have the necessary resources and expertise and have access to all information necessary to perform its functions.
ESG rating providers should not provide consulting activities to investors, or financial or non-financial undertakings. Furthermore, ESG rating providers providing banking, insurance and reinsurance or investment activities, as well as entities that are part of a group to which an ESG rating provider belongs, should take appropriate measures to prevent conflicts of interest .
ESG rating providers should ensure that rating analysts, employees and any other natural person whose services are placed at its disposal or under its control and who are directly involved in the provision of ESG ratings, including analysts directly involved in the rating process and persons involved in the provision of scores, are appropriately trained and have the knowledge and experience that is necessary for the performance of the duties and tasks assigned, in particular a sufficient understanding of potential material financial risk to the rated entity and potential material impact of the rated entity on the environment and on society in general.
ESG rating providers should ensure that, when carrying out an assessment, the persons concerned should be independent of the rated entity and should not be involved in the decision making of the rated entity during the period of the assessment leading to the issuance of an ESG rating and for one year thereafter.
When the persons concerned participate in or otherwise influence the determination of an ESG rating of any rated entity, ESG rating providers should take all reasonable steps to ensure that their independence is not affected by any existing or potential conflict of interest or business or other direct relationship involving those persons.
Use of several ESG rating providers
When an entity or investor requests an ESG rating from two or more providers, they must consider designating at least one provider whose market share in the EU does not exceed 5%.
Record-keeping requirements
ESG rating providers should keep a 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, and the rating status, and make that information available upon request to competent authorities in charge of the supervision of the regulated financial undertakings in the Union.
Transparency requirements
ESG rating providers should disclose on their website, as a minimum, the methodologies, models and key rating assumptions they use in their ESG rating activities. Separate E, S and G ratings should be provided rather than a single ESG metric that aggregates E, S and G factors.
In particular, ESG rating providers should provide a single ESG rating that aggregates E, S and G factors or an aggregated indicator of these factors, as well as the score assigned to each relevant factor and the weighting of each of these factors in the aggregation.
Independence and avoidance of conflicts of interest
ESG rating providers should: (i) put in place a robust governance arrangement, including a clear organisational structure with well-defined, transparent and consistent roles and responsibilities for all persons involved in the provision of an ESG rating; (ii) take necessary steps to ensure the independence and avoidance of conflicts of interest of all persons involved in the provision of an ESG rating.
PURPOSE: to lay down a consistent and effective regime to address the shortcomings and vulnerabilities that environmental, social, and governance ratings pose.
PROPOSED ACT: Regulation of the European Parliament and of the Council.
ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council.
BACKGROUND: environmental, social, and governance (ESG) investing, that is, investing which takes ESG factors into account when making investment decisions, is becoming an important part of mainstream finance. Notably, investment funds with sustainable characteristics or objectives have largely increased in number, size and the type of capital they attract. In this context, an ESG investment ecosystem has developed, including amongst others the supply of ESG ratings. Such ESG ratings are marketed as providing an opinion on the exposure of a company or entity to environmental, social and/or governance factors , and their impact on society.
The current ESG rating market suffers from deficiencies and is not functioning properly, with users’ and rated entities’ needs regarding ESG ratings not being met and confidence in ratings undermined. This problem has a number of different dimensions, mainly (i) the lack of transparency on the characteristics of ESG ratings, their methodologies and their data sources and (ii) the lack of clarity on how ESG rating providers operate. Therefore, ESG ratings do not serve their purpose and do not sufficiently enable users, investors and rated entities to take informed decisions as regards ESG-related risks, impacts and opportunities.
Hence, the Commission committed in the renewed sustainable finance strategy adopted in July 2021, to take action to improve the reliability, comparability and transparency of ESG ratings.
CONTENT: this proposal aims to introduces a common regulatory approach to enhance the integrity, transparency, responsibility, good governance, and independence of ESG rating activities , contributing to the transparency 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 requirements related to ESG ratings and rules on the organisation and conduct of ESG rating providers.
More specifically, this proposal aims to enhance the quality of information about ESG ratings, by (i) improving transparency of ESG ratings characteristics and methodologies to enable investors to make better informed investment decisions in regard to sustainability objectives, and by (ii) ensuring increased clarity on operations of ESG rating providers and the prevention of risks of conflict of interest at ESG rating providers’ level.
As supervisor of the ESG rating providers under this proposal, the European Securities and Markets Authority (ESMA) would be the appropriate body to take stock of the developments and highlight potential issues of concern, liaising with relevant national authorities in the Member State where ESG ratings are used and where ESG rating providers are located and have their operations.
Budgetary implications
This proposal empowers ESMA to carry out a new function, namely to authorise and supervise ESG rating providers providing their services under this Regulation. This will require ESMA to charge ESG rating providers fees, which should cover all administrative costs incurred by ESMA for its authorisation and supervision activities. The total annual cost increase is estimated at approximately EUR 3.7-3.8 million. This cost will not be borne by EU budget.
Documents
- Commission response to text adopted in plenary: SP(2024)394
- Results of vote in Parliament: Results of vote in Parliament
- Decision by Parliament, 1st reading: T9-0347/2024
- Approval in committee of the text agreed at 1st reading interinstitutional negotiations: PE759.068
- Coreper letter confirming interinstitutional agreement: GEDA/A/(2024)001016
- Text agreed during interinstitutional negotiations: PE759.068
- Contribution: COM(2023)0314
- Committee report tabled for plenary, 1st reading: A9-0417/2023
- Specific opinion: PE756.346
- Amendments tabled in committee: PE754.956
- Contribution: COM(2023)0314
- Committee draft report: PE753.758
- Document attached to the procedure: EUR-Lex
- Document attached to the procedure: SEC(2023)0241
- Document attached to the procedure: EUR-Lex
- Document attached to the procedure: SWD(2023)0204
- Document attached to the procedure: EUR-Lex
- Document attached to the procedure: SWD(2023)0207
- Legislative proposal published: COM(2023)0314
- Legislative proposal published: EUR-Lex
- Document attached to the procedure: EUR-Lex SEC(2023)0241
- Document attached to the procedure: EUR-Lex SWD(2023)0204
- Document attached to the procedure: EUR-Lex SWD(2023)0207
- Committee draft report: PE753.758
- Amendments tabled in committee: PE754.956
- Specific opinion: PE756.346
- Coreper letter confirming interinstitutional agreement: GEDA/A/(2024)001016
- Text agreed during interinstitutional negotiations: PE759.068
- Commission response to text adopted in plenary: SP(2024)394
- Contribution: COM(2023)0314
- Contribution: COM(2023)0314
Votes
A9-0417/2023 – Aurore Lalucq – Provisional agreement – Am 2 #
Amendments | Dossier |
421 |
2023/0177(COD)
2023/10/25
ECON
421 amendments...
Amendment 100 #
Proposal for a regulation 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
Amendment 101 #
Proposal for a regulation Recital 2 (2) The transition to a sustainable economy is key to ensuring the overall long-term
Amendment 102 #
Proposal for a regulation Recital 3 (3) Achieving SDG objectives in the Union requires the channelling of capital flows towards sustainable investments. It is important to exploit fully the potential of the internal market for the achievement of those goals, while balancing these objectives with economic concerns. In that context, it is crucial to remove obstacles to the efficient movement of capital towards sustainable investments in the internal market and to prevent such obstacles from emerging.
Amendment 103 #
Proposal for a regulation Recital 3 (3) Achieving SDG objectives in the Union requires the channelling of capital flows towards sustainable investments and de-incentivising unsustainable investments and through this, transferring investments from significant harm and unsustainable to sustainable. It is important to exploit fully the potential of the internal market for the achievement of those goals. In that context, it is crucial to remove obstacles to the efficient movement of capital towards sustainable investments in the internal market and to prevent such obstacles from emerging.
Amendment 104 #
Proposal for a regulation Recital 3 (3) Achieving SDG objectives in the Union requires the channelling of capital flows towards sustainable investments. It is
Amendment 105 #
Proposal for a regulation Recital 4 (4) The EU’s approach to sustainable and inclusive growth is anchored in the 20 principles of the European Pillar of Social Rights
Amendment 106 #
Proposal for a regulation 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:
Amendment 107 #
Proposal for a regulation Recital 6 (6) As part of the Action Plan, the Commission commissioned a study entitled “Study on Sustainability Related Ratings, Data and Research”23 to take stock of the developments in the sustainability-related products and services market, identify the main market participants and highlight potential shortcomings. That study provided an inventory and classification of market actors, sustainability products and services available in the market and an analysis of the use and perceived quality of sustainability-related products and services by market participants. The study highlighted the lack of transparency and accuracy of Environmental, Social and Governance (‘ESG’) ratings methodologies and the lack of clarity over the operations of ESG rating
Amendment 108 #
Proposal for a regulation 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) Amendment 110 #
Proposal for a regulation Recital 9 (9) At international level, the International Organization of Securities Commissions (‘IOSCO’) has issued a report in November 2021 containing a set of recommendations on ESG ratings and data products providers25 . _________________ 25 IOSCO Report on ESG ratings and data
Amendment 111 #
Proposal for a regulation Recital 10 (10) ESG ratings and ESG data products 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,
Amendment 112 #
Proposal for a regulation 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,
Amendment 113 #
Proposal for a regulation 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
Amendment 114 #
Proposal for a regulation Recital 10 (10) ESG ratings play an important role in global capital markets, as investors,
Amendment 115 #
Proposal for a regulation Recital 12 (12) It is necessary to acknowledge the various business models of the ESG rating market. A first business model is the user- paid model, where users are mainly investors that purchase ESG ratings for investment decisions. A second business model is the issuer-pay model, where
Amendment 116 #
Proposal for a regulation Recital 12 a (new) (12 a) Aside from their use in the financial services sector, ESG rating assessments are also used in the procurement and supply chain context. Therefore, ESMA should take account of the distinction between ESG ratings providers in the financial sectors and non-financial sectors in its supervision of ESG rating providers.
Amendment 117 #
Proposal for a regulation 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
Amendment 118 #
Proposal for a regulation 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
Amendment 119 #
Proposal for a regulation Recital 15 (15) Rules on ESG ratings and ESG data products providers should not apply to private ESG ratings or ESG data 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 and ESG data produced by European financial undertakings that are used for internal purposes
Amendment 120 #
Proposal for a regulation 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 solely for internal or intra-group purposes. ESG ratings developed by European or national authorities and by central banks should also be exempted from such rules. 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 121 #
Proposal for a regulation 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 for internal purposes. ESG ratings developed by European or national authorities and by
Amendment 122 #
Proposal for a regulation 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 123 #
Proposal for a regulation 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, recognizing the existence of different business models, 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.
Amendment 124 #
Proposal for a regulation 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
Amendment 125 #
Proposal for a regulation Recital 16 a (new) (16 a) ESG and ethical considerations are not a novel concept for businesses; they have held significant importance even before formal bureaucratic requirements. Every company aspiring to achieve long-term success has long recognised that it is no longer sufficient to solely focus on shareholder value but equally crucial to consider stakeholder value. Deception or unethical treatment of customers will inevitably jeopardize the sustainable success of a company over time. Inadequate treatment of employees within a company negatively affects their performance and may lead to employee turnover. Furthermore, any violation of legal regulations exposes the company to substantial legal and financial risks, including potential liability claims and the jeopardy of the company's existence. Misleading shareholders ultimately leads to regulatory sanctions in the stock market.
Amendment 126 #
Proposal for a regulation 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, t
Amendment 127 #
Proposal for a regulation 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, three possible regimes are proposed for those third countries ESG rating providers: equivalence, 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
Amendment 128 #
Proposal for a regulation 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. There are objective reasons why a third country ESG rating provider has to provide the ESG rating and why that ESG rating should be endorsed for use in the Union, including proximity to the issuer, a particular industry, centres of excellence for sub-components of ESG factors, expertise of staff employed outside the EU, and the development of ratings through the collaboration of global teams . Therefore, three possible regimes are proposed for those third countries ESG rating providers: equivalence, 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 in the Union 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,
Amendment 129 #
Proposal for a regulation 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.
Amendment 130 #
Proposal for a regulation Recital 20 (20) To ensure the quality and reliability of ESG ratings, ESG rating providers should use rating methodologies that are rigorous, systematic, objective, and continuous
Amendment 131 #
Proposal for a regulation 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. However, it is key to leave it to the ESG rating providers themselves to determine their own methodologies according to the above principles. ESG rating providers should review ESG ratings
Amendment 132 #
Proposal for a regulation Recital 20 (20) To ensure the quality and reliability of ESG ratings, ESG rating providers should use rating methodologies that are rigorous, systematic,
Amendment 133 #
Proposal for a regulation 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 134 #
Proposal for a regulation 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, they should, to the greatest extent possible, take into account all relevant information, in each of the materiality dimensions, on sustainability matters falling within the scope of the rated entity’s activities. As a result, the rating products should explicitly
Amendment 135 #
Proposal for a regulation 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 is 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 them. They should also explicitly disclose whether the rating addresses other dimensions. For the same reason, ESG rating providers should provide more
Amendment 136 #
Proposal for a regulation 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 is 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 them. 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
Amendment 137 #
Proposal for a regulation 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 is 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 them. 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
Amendment 138 #
Proposal for a regulation 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
Amendment 139 #
Proposal for a regulation Recital 21 a (new) (21 a) This Regulation should not interfere with the ESG rating methodologies or content. Diversity in the methodologies of ESG ratings providers ensures that the broad requirements of users can be met and promotes competition in the market.
Amendment 140 #
Proposal for a regulation Recital 22 (22) ESG rating providers should ensure that they provide ESG ratings that are independent, objective and of adequate quality. It is important to introduce organisational requirements ensuring the prevention and mitigation of potential conflicts of interests. To ensure their independence, ESG rating providers should avoid situations of conflict of interest and manage those conflicts adequately where they are unavoidable. ESG rating providers should disclose conflicts of interest in a timely manner. They should also keep
Amendment 141 #
Proposal for a regulation Recital 22 (22) ESG rating providers should ensure that they provide ESG ratings that are independent, objective and of adequate quality. It is important to introduce organisational requirements ensuring the prevention and mitigation of potential conflicts of interests. To ensure their independence, ESG rating providers should avoid situations of conflict of interest and manage those conflicts adequately where they are unavoidable. ESG rating providers should disclose conflicts of interest in a timely manner. They should also keep
Amendment 142 #
Proposal for a regulation Recital 22 (22) ESG rating providers should ensure that they provide ESG ratings that are independent, objective and of adequate quality. It is important to introduce organisational requirements ensuring the prevention and mitigation of potential conflicts of interests. To ensure their independence, ESG rating providers should avoid situations of conflict of interest and manage those conflicts adequately where they are unavoidable. ESG rating providers should disclose conflicts of interest in a timely manner. They should also keep
Amendment 143 #
Proposal for a regulation Recital 22 a (new) (22 a) The Commission should review the Credit Rating Agencies Regulation to include the obligation to rate sustainability aspects in both, public and private sectors.
Amendment 144 #
Proposal for a regulation Recital 22 b (new) (22 b) The ratings need to be based on harmonised life cycle assessment methodologies and science. These methodologies should be disclosed transparently. The negative impacts of the ESG risks should be clearly rated, in case of prevailing risk or significant harm, according to the do no significant harm principle.
Amendment 145 #
Proposal for a regulation Recital 22 c (new) (22 c) ESG ratings should work in a social and climate-just way within the planetary boundaries.
Amendment 146 #
Proposal for a regulation Article 1 – paragraph 1 This Regulation introduces a common regulatory approach to enhance the
Amendment 147 #
Proposal for a regulation Article 1 – paragraph 1 This Regulation introduces a common regulatory approach to enhance the integrity, transparency, responsibility, good governance, and independence of ESG rating activities, contributing to the consistency, transparency and
Amendment 148 #
Proposal for a regulation Article 1 a (new) Article1a Use of an ESG rating A regulated financial undertaking may use an ESG rating or a combination of ESG ratings in the Union if the ESG rating is provided by an ESG rating provider included in the register referred to in Article 13 or if it has developed the ESG rating exclusively for in-house use.
Amendment 149 #
Proposal for a regulation Article 2 – paragraph 1 1. This Regulation applies to ESG ratings
Amendment 150 #
Proposal for a regulation Article 2 – paragraph 1 1. This Regulation applies to ESG ratings issued by ESG rating providers operating in the Union and to ESG DATA estimates that are disclosed publicly or that are distributed to regulated financial undertakings in the Union, undertakings that fall under the scope of Directive 2013/34/EU of the European Parliament and of the Council, or Union or Member States public authorities.
Amendment 151 #
Proposal for a regulation Article 2 – paragraph 2 – point a (a) private ESG ratings and ESG data products which are not intended for public disclosure or for distribution;
Amendment 152 #
Proposal for a regulation Article 2 – paragraph 2 – point b (b) ESG ratings produced by regulated financial undertakings in the Union that
Amendment 153 #
Proposal for a regulation Article 2 – paragraph 2 – point b (b) ESG ratings produced by regulated financial undertakings in the Union that
Amendment 154 #
Proposal for a regulation Article 2 – paragraph 2 – point b (b) ESG ratings and ESG data products produced by regulated financial undertakings in the Union that are: i) used for internal purposes, or
Amendment 155 #
(b) ESG ratings produced by regulated financial undertakings in the Union that are used for internal purposes or for providing in-house financial services and products and that are not used in external marketing of products or advice issued by the financial undertakings;
Amendment 156 #
Proposal for a regulation Article 2 – paragraph 2 – point b (b) ESG ratings produced by regulated financial undertakings in the Union that are neither published nor provided to clients and are used for internal purposes or for providing in-house financial services and products, including services to other entities that are part of the same group;
Amendment 157 #
Proposal for a regulation 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 or intra-group financial services and products
Amendment 158 #
Proposal for a regulation 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 159 #
Proposal for a regulation Article 2 – paragraph 2 – point b a (new) (ba) ESG scores or factors that are produced as part of and incorportated into the public methodologies for credit ratings and are not marketed independently;
Amendment 160 #
Proposal for a regulation Article 2 – paragraph 2 – point c Amendment 161 #
Proposal for a regulation Article 2 – paragraph 2 – point c (c) the provision of raw ESG data that do not contain and element of rating or scoring
Amendment 162 #
Proposal for a regulation Article 2 – paragraph 2 – point c (c) the provision of
Amendment 163 #
Proposal for a regulation Article 2 – paragraph 2 – point c a (new) (ca) ESG ratings which are produced and disclosed within the scope of existing EU regulations;
Amendment 164 #
Proposal for a regulation Article 2 – paragraph 2 – point d (d) credit ratings issued pursuant to Regulation (EC) No 1060/2009 of the European Parliament and of the Council30 and any ESG-related scores that are used as components of credit ratings as part of the public methodology for credit ratings; _________________ 30 Regulation (EC) No 1060/2009 of the
Amendment 165 #
Proposal for a regulation Article 2 – paragraph 2 – point d (d) credit ratings issued pursuant to Regulation (EC) No 1060/2009 of the European Parliament and of the Council30 and any assessments of ESG factors that are created in relation to the analysis of, or as an output of, credit ratings; _________________ 30 Regulation (EC) No 1060/2009 of the
Amendment 166 #
Proposal for a regulation Article 2 – paragraph 2 – point e (e)
Amendment 167 #
Proposal for a regulation Article 2 – paragraph 2 – point e (e) products or services that incorporate an element of an ESG rating or of an ESG data product;
Amendment 168 #
Proposal for a regulation Article 2 – paragraph 2 – point e a (new) (ea) ESG ratings produced internally and forming part of “investment research” products as defined in Article 24(1) of Directive 2006/73/EC and other forms of general ESG-related recommendations, relating to transactions in financial instruments or to financial obligations (such as MAR and MiFID II - delegated acts on investment recommendation and research);
Amendment 169 #
Proposal for a regulation Article 2 – paragraph 2 – point e b (new) (eb) opinions about the sustainability profile of a financial instrument or a financial obligation;
Amendment 170 #
Proposal for a regulation Article 2 – paragraph 2 – point e c (new) (ec) opinions about the sustainability profile of a financial instrument or a financial obligation; (h) credit ratings issued pursuant to Regulation (EC) No 1060/2009 of the European Parliament and of the Council;
Amendment 171 #
Proposal for a regulation Article 2 – paragraph 2 – point e d (new) (ed) ESG rating elements that are used or provided or disclosed as complementary or substantial to financial products or services that incorporate an element of an ESG rating;
Amendment 172 #
Proposal for a regulation Article 2 – paragraph 2 – point f (f) second-party opinions
Amendment 173 #
Proposal for a regulation Article 2 – paragraph 2 – point f (f) second-party opinions on
Amendment 174 #
Proposal for a regulation Article 2 – paragraph 2 – point f (f) second-party opinions on sustainab
Amendment 175 #
Proposal for a regulation Article 2 – paragraph 2 – point g (g) ESG ratings and ESG data products produced by Union or Member States’ public authorities;
Amendment 176 #
Proposal for a regulation Article 2 – paragraph 2 – point h (h) ESG ratings from an authorised ESG rating provider that are made available to users by a third party or an affiliate of the authorised ESG rating provider within the same group structure;
Amendment 177 #
Proposal for a regulation Article 2 – paragraph 2 – point h (h) ESG ratings and ESG data products from an authorised ESG ratings and ESG data products provider that are made available to users by a third party;
Amendment 178 #
Proposal for a regulation Article 2 – paragraph 2 – point i – introductory part (i) ESG ratings and ESG data products produced by central banks that fulfil all of the following conditions:
Amendment 179 #
Proposal for a regulation Article 2 – paragraph 2 – point i – introductory part (i) ESG ratings produced by
Amendment 180 #
Proposal for a regulation Article 2 – paragraph 2 – point i – introductory part (i) ESG ratings produced by
Amendment 181 #
Proposal for a regulation Article 2 – paragraph 2 – point i – point a Amendment 182 #
Proposal for a regulation Article 2 – paragraph 2 – point i – point b Amendment 183 #
Proposal for a regulation Article 2 – paragraph 2 – point i – point b (b) they are not
Amendment 184 #
Proposal for a regulation Article 2 – paragraph 2 – point i – point c Amendment 185 #
Proposal for a regulation Article 2 – paragraph 2 – point i – point c Amendment 186 #
Proposal for a regulation Article 2 – paragraph 2 – point i – point d Amendment 187 #
Proposal for a regulation Article 2 – paragraph 2 – point i – point d Amendment 188 #
Proposal for a regulation Article 2 – paragraph 2 – point i – point d a (new) (d a) the transparency of methodology requirements pursuant to Article 13 of Regulation 2016/1011;
Amendment 189 #
Proposal for a regulation 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 190 #
Proposal for a regulation Article 2 – paragraph 2 – point i a (new) (i a) investment reasearch products, such as equity research reports, which may incorporate ESG considerations, but which are different to the ratings of only ESG matters.
Amendment 191 #
Proposal for a regulation Article 2 – paragraph 2 – point i a (new) (i a) the mandatory disclosures pursuant to Articles 6, 8 and 9 of Regulation (EU) 2019/2088;
Amendment 192 #
Proposal for a regulation Article 2 – paragraph 2 – point i b (new) (i b) the disclosures pursuant to Articles 5, 6 and 8 of Regulation (EU) 2020/852;
Amendment 193 #
Proposal for a regulation Article 2 – paragraph 2 – point i c (new) (i c) the transparency of methodology requirements to Article 13 and Annex III of Regulation 2019/2089;
Amendment 194 #
Proposal for a regulation Article 2 – paragraph 2 – point i d (new) (i d) the transparency of methodology requirements to Article 13 of Regulation 2019/2175;
Amendment 195 #
Proposal for a regulation Article 2 – paragraph 2 – point i e (new) (ie) the transparency of methodology requirements to Article 13 of Regulation 2021/168.
Amendment 196 #
Proposal for a regulation Article 2 – paragraph 2 a (new) Amendment 197 #
Proposal for a regulation Article 3 – paragraph 1 – point 1 (1) ‘ESG rating’ means a product marketed as providing an opinion, a score or a combination of both, or the analysis or modelling of data 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 methodology
Amendment 198 #
Proposal for a regulation 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 E
Amendment 199 #
Proposal for a regulation 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 200 #
Proposal for a regulation Article 3 – paragraph 1 – point 1 (1) ‘ESG rating’ means an ESG opinion, a ESG 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 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 201 #
Proposal for a regulation 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 methodology and defined ranking system of rating categories and that are
Amendment 202 #
Proposal for a regulation Article 3 – paragraph 1 – point 1 a (new) (1 a) ‘ESG data estimates’ means raw data relative to ESG profile or characteristics of an undertaking that do not result from the gathering of ESG data from companies’ public disclosures or from other publicly available information but rather derive from estimates or approximations by the ESG data providers - where pure raw data are not available;
Amendment 203 #
Proposal for a regulation Article 3 – paragraph 1 – point 2 (2) ‘opinion’ means an assessment
Amendment 204 #
Proposal for a regulation Article 3 – paragraph 1 – point 2 (2) ‘ESG opinion’ means an ESG assessment that based on a rules-based methodology and defined ranking system of rating categories, involving directly a rating analyst in the rating process or systems process;
Amendment 205 #
Proposal for a regulation Article 3 – paragraph 1 – point 3 (3) ‘score’ means a measure derived from data
Amendment 206 #
Proposal for a regulation Article 3 – paragraph 1 – point 3 (3) ‘ESG score’ means a ESG measure derived from data, using a rule-based methodology, and based only on a pre- established statistical or algorithmic system or model, without any additional substantial analytical input from an analyst;
Amendment 207 #
Proposal for a regulation Article 3 – paragraph 1 – point 3 a (new) (3 a) ‘ESG data product’ means a product marketed as providing either a specific E, S, or G focus or a holistic or combined ESG focus on an entity, financial instrument, product or company’s ESG profile or characteristics or exposure to ESG, climatic or environmental risks or impact on society and the environment, whether or not they are explicitly labelled as “ESG data products”. ESG data products include: (i) ‘ESG raw data’ gathered from companies' publicly available reportings whenever possible or other sources otherwise, formatted and re-disseminated, and (ii) ‘ESG processed data’ that have been determined or estimated according to a methodology applied by the provider, including, but not limited to, estimates, sectoral data and proxies of missing raw data, and that do not qualify as ESG ratings;
Amendment 208 #
Proposal for a regulation Article 3 – paragraph 1 – point 4 (4) ‘ESG ratings provider
Amendment 209 #
Proposal for a regulation Article 3 – paragraph 1 – point 4 (4) ‘ESG rating providers’ means a legal person whose occupation includes the
Amendment 210 #
Proposal for a regulation Article 3 – paragraph 1 – point 4 (4) ‘ESG rating providers’ means a legal person whose occupation includes the
Amendment 211 #
Proposal for a regulation Article 3 – paragraph 1 – point 4 (4) ‘ESG rating providers’ means a legal person whose occupation includes the
Amendment 212 #
Proposal for a regulation Article 3 – paragraph 1 – point 4 a (new) (4a) ‘ESG data products provider’ means a legal person whose occupation includes the marketing of ESG data products on a professional basis, and for a charge;
Amendment 213 #
Proposal for a regulation Article 3 – paragraph 1 – point 4 b (new) (4 b) ‘ESG ratings and ESG data products provider’ cover an ESG rating provider, or an ESG data product provider, or a provider marketing both ESG ratings and ESG data products on a professional basis, and for a charge;
Amendment 214 #
Proposal for a regulation Article 3 – paragraph 1 – point 7 (7) ‘rated entity’ means a legal person, a financial instrument, a financial product or a public authority or a body governed by public law which is explicitly
Amendment 215 #
Proposal for a regulation Article 3 – paragraph 1 – point 8 (8) ‘user’ means a natural or legal person, including a public authority or a body governed by public law, to which an ESG rating is provided, on the basis of a contract with an ESG rating provider;
Amendment 216 #
Proposal for a regulation 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 217 #
Proposal for a regulation Article 3 – paragraph 1 – point 10 Amendment 218 #
(10) ‘senior management’ means the person or persons who effectively
Amendment 219 #
Proposal for a regulation Article 3 – paragraph 1 – point 11 (11) ‘group of ESG rating and ESG data products providers' means a group of undertakings established in the Union consisting of a parent undertaking and its subsidiaries within the meaning of Article 2 of Directive 2013/34/EU, and undertakings linked to each other by a relationship and whose occupation includes the provision of ESG ratings and/or ESG data products.
Amendment 220 #
Proposal for a regulation Title II Provision of ESG ratings and ESG data products in the Union
Amendment 221 #
Proposal for a regulation Article 4 – title Requirements to provide ESG ratings and ESG data products in the Union
Amendment 222 #
Proposal for a regulation Article 4 – paragraph 1 – introductory part Any
Amendment 223 #
Proposal for a regulation Article 4 – paragraph 1 – point d Amendment 224 #
Proposal for a regulation Title II – Chapter 1 – title 1 Authorisation to provide ESG ratings and ESG data products in the Union
Amendment 225 #
Proposal for a regulation Article 5 – title Application for an authorisation to provide
Amendment 226 #
Proposal for a regulation Article 5 – paragraph 1 1.
Amendment 227 #
Proposal for a regulation Article 5 – paragraph 3 – subparagraph 2 ESMA shall submit those draft regulatory technical standards to the Commission by
Amendment 228 #
Proposal for a regulation Article 5 – paragraph 3 – subparagraph 3 Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph, including the ones related to material changes provisioned in paragraph 5a, in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010.
Amendment 229 #
Proposal for a regulation Article 5 – paragraph 5 5. ESG rating providers shall notify ESMA of any material changes to the
Amendment 230 #
Proposal for a regulation Article 5 – paragraph 5 a (new) 5a. ESMA shall develop draft regulatory technical standards to specify what constitutes a material change as referred in paragraph 5.
Amendment 231 #
Proposal for a regulation Article 6 – title Examination of the application for authorisation of ESG rating
Amendment 232 #
1. Within
Amendment 233 #
Proposal for a regulation Article 6 – paragraph 3 3. Within
Amendment 234 #
Proposal for a regulation Article 6 – paragraph 3 3. Within
Amendment 235 #
Proposal for a regulation Article 6 – paragraph 4 – introductory part 4. ESMA may extend the period referred to in the paragraph 3
Amendment 236 #
Proposal for a regulation Article 6 – paragraph 4 – introductory part 4. ESMA may extend the period referred to in the paragraph 3 to 1
Amendment 237 #
Proposal for a regulation Article 6 – paragraph 5 a (new) 5 a. After its notification according to Article 48(1), the rating provider shall be registered as temporarily authorised in the register referred to in Article 13 and be permitted to continue providing services in the Union until its application has been approved or denied.
Amendment 238 #
Proposal for a regulation Article 6 – paragraph 5 a (new) 5 a. If no decision is adopted by ESMA within the period referred to in paragraph 3 or4, as applicable, the applicant shall not be considered authorised to provide ESG ratings in the Union. Authorities´ adequate expertise to analyse the sustainability risks should be granted.
Amendment 239 #
Proposal for a regulation Article 7 – title Decision to grant or to refuse the authorisation to provide ESG ratings and ESG data products and notification of that decision (Amendment applies throughout article 7: ESG ratings and ESG data products providers.)
Amendment 240 #
1. ESMA shall withdraw or suspend the authorisation of an ESG ratings and ESG data products provider(s) in any of the following cases: (Amendment applies throughout article 8: ESG ratings and ESG data products providers.)
Amendment 241 #
Proposal for a regulation Article 8 – paragraph 1 – point a (a) the ESG rating provider has expressly renounced the authorisation or has provided no ESG ratings for
Amendment 242 #
Proposal for a regulation Article 8 – paragraph 2 a (new) 2a. In the event of a withdrawal or suspension on the basis of the cases listed in points (b)-(d) of paragraph 1, ESMA shall publish the decision on its website.
Amendment 243 #
Proposal for a regulation Title II – Chapter 2 – title 2 Provision of ESG ratings and ESG data products in the Union by third country ESG ratings and ESG data products providers
Amendment 244 #
Proposal for a regulation Article 9 – paragraph 1 – introductory part 1. A third country ESG ratings and ESG data products providers(s) that wishes to provide ESG ratings and ESG data products in the Union shall only be able to do so where it is included in the register referred to in Article 13 and provided that all of the following conditions have been complied with: (Amendment applies throughout article 9: ESG ratings and ESG data products providers.)
Amendment 245 #
Proposal for a regulation Article 9 – paragraph 1 – point a (a) the third country ESG rating provider is a legal person, is authorised
Amendment 246 #
Proposal for a regulation 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 247 #
Proposal for a regulation Article 9 – paragraph 1 – point d a (new) (d a) 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 249 #
Proposal for a regulation Article 9 – paragraph 1 – point d b (new) (d b) the third country rating provider has been authorised by ESMA in accordance with Article 5.
Amendment 250 #
Proposal for a regulation Article 9 – paragraph 2 – subparagraph 1 – introductory part The Commission
Amendment 251 #
Proposal for a regulation Article 9 – paragraph 2 – subparagraph 1 – point b (b) compliance with the binding requirements referred to in point (a) is subject to effective, regular and equivalent supervision and enforcement on an on-going basis in that third country.
Amendment 252 #
Proposal for a regulation Article 9 – paragraph 2 – subparagraph 2 Amendment 253 #
Proposal for a regulation Article 9 – paragraph 2 – subparagraph 2 For the purposes of point (a),
Amendment 254 #
Proposal for a regulation Article 9 – paragraph 2 – subparagraph 2 For the purposes of point (a), the Commission shall take into account whether the legal framework and supervisory practice of a third country ensures compliance with the IOSCO recommendations for ESG Ratings published in November 2021 as well as with all Europan Union legislation relating to sustainability disclosure, including Regulation (EU) 2019/2088 of the European Parliament and of the Council, Regulation (EU) 2020/852 of the European Parliament and of the Council and Directive (EU) 2022/2464 of the European Parliament and of the Council.
Amendment 255 #
Proposal for a regulation Article 9 – paragraph 2 – subparagraph 2 For the purposes of point (a), the
Amendment 256 #
Proposal for a regulation 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 257 #
Proposal for a regulation Article 10 – title Endorsement of ESG ratings and ESG data products provided by a third country ESG rating
Amendment 258 #
Proposal for a regulation Article 10 – paragraph 1 – subparagraph 1 – introductory part An ESG rating provider located in the Union and authorised in accordance with Article 7, or any other regulated financial undertaking in the Union with a clear and well-defined role within the control or accountability framework of a third country ESG rating provider, may endorse ESG ratings provided by a third country ESG rating provider belonging to the same group, provided that all of the following conditions have been met:
Amendment 259 #
Proposal for a regulation Article 10 – paragraph 1 – subparagraph 1 – point a (a) the endorsing ESG rating provider
Amendment 260 #
(b) the endorsing ESG rating provider
Amendment 261 #
Proposal for a regulation Article 10 – paragraph 1 – subparagraph 1 – point c (c) the endorsing ESG rating provider
Amendment 262 #
Proposal for a regulation Article 10 – paragraph 1 – subparagraph 1 – point e (e) the endorsing ESG rating provider
Amendment 263 #
Proposal for a regulation 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 264 #
Proposal for a regulation Article 10 – paragraph 1 – subparagraph 2 For the purposes of point (b)
Amendment 265 #
Proposal for a regulation Article 10 – paragraph 1 – subparagraph 2 For the purposes of point (b) of the first subparagraph, ESMA may consider that compliance of the provision of the ESG rating to be endorsed with the IOSCO recommendations for ESG ratings as well as with all Europan Union legislation relating to sustainability disclosure, including Regulation (EU) 2019/2088 of the European Parliament and of the Council, Regulation (EU) 2020/852 of the European Parliament and of the Council and Directive (EU) 2022/2464 of the European Parliament and of the Council is equivalent to compliance with the requirements of this Regulation.
Amendment 266 #
Proposal for a regulation Article 10 – paragraph 1 – subparagraph 2 For the purposes of point (b) of the first subparagraph, ESMA
Amendment 267 #
Proposal for a regulation Article 10 – paragraph 1 – subparagraph 2 For the purposes of point (b) of the first subparagraph, ESMA may consider as a baseline 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 requirements of this Regulation.
Amendment 268 #
Proposal for a regulation Article 10 – paragraph 1 – subparagraph 2 a (new) The endorsement of ESG ratings or ESG data products cannot represent the main activity of an ESG rating provider authorised in accordance with Article 7.
Amendment 269 #
Proposal for a regulation Article 10 – paragraph 1 – subparagraph 2 b (new) For the purposes of point (d) of the first subparagraph, ESMA shall develop regulatory technical standards to specify the objective reasons to be accepted.
Amendment 270 #
Proposal for a regulation Article 10 – paragraph 3 3. Within
Amendment 271 #
Proposal for a regulation 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 272 #
Proposal for a regulation Article 10 – paragraph 3 3.
Amendment 273 #
Proposal for a regulation Article 10 – paragraph 4 4. An endorsed ESG rating shall be considered to be an ESG rating provided by the endorsing ESG rating provider
Amendment 274 #
Proposal for a regulation Article 10 – paragraph 5 5. An ESG rating provider or other regulated financial undertaking in the Union that has endorsed an ESG rating provided by a third country ESG rating provider shall remain fully responsible for such an ESG rating and for compliance with the obligations under this Regulation.
Amendment 275 #
Proposal for a regulation Article 10 – paragraph 6 6. Where ESMA has well-founded
Amendment 276 #
Proposal for a regulation Article 10 – paragraph 6 6. Where ESMA has well-founded reasons to consider that the conditions laid down in paragraph 1 are no longer fulfilled, it shall have the power to require the endorsing ESG rating provider or other regulated financial undertaking in the Union to cease the endorsement.
Amendment 278 #
Proposal for a regulation Article 11 – title Recognition of third country ESG rating
Amendment 279 #
Proposal for a regulation Article 11 – paragraph 1 1. Until the Commission has adopted an equivalence decision as referred to in Article 9 or, where adopted, in the event that the equivalence decision is repealed, third country ESG rating
Amendment 280 #
Proposal for a regulation Article 11 – paragraph 1 1. Until the Commission has adopted an equivalence decision as referred to in Article 9 or, where adopted, in the event that the equivalence decision is repealed, third country ESG rating providers
Amendment 281 #
Proposal for a regulation Article 11 – paragraph 1 1. Until the Commission has adopted an equivalence decision as referred to in Article 9 or, where adopted, in the event that the equivalence decision is repealed, third country ESG rating providers with an annual net turnover on their ESG rating activities in the Union below EUR 12 million for three consecutive years may provide ESG ratings to regulated financial undertakings in the Union, provided that ESMA has recognised that third country ESG rating provider in accordance with this paragraphs XX and YY.
Amendment 282 #
Proposal for a regulation Article 11 – paragraph 2 – subparagraph 1 Third country ESG rating providers that wish to be recognised as referred to in paragraph 1 shall comply with the requirements established in this Regulation and apply for recognition to ESMA. ESG rating providers may fulfil that condition by applying the IOSCO recommendations on ESG ratings provided that such application is equivalent to compliance with the requirements established in this Regulation and, for the ESG rating of the undertakings in the scope of Directive 2013/34/EU of the European Parliament and of the Council, that it takes into account information of the rated entity’s activities on sustainability matters, as defined in Article 2, subparagraph b, point 17 of Directive 2013/34/EU of the European Parliament and of the Council, for each of the materiality dimensions.
Amendment 283 #
Proposal for a regulation Article 11 – paragraph 2 – subparagraph 1 Third country ESG ratings and ESG data products provider
Amendment 284 #
Proposal for a regulation Article 11 – paragraph 2 – subparagraph 1 Third country ESG rating providers that wish to be recognised as referred to in paragraph 1 shall comply with the requirements established in this Regulation and apply for recognition to ESMA.
Amendment 285 #
Proposal for a regulation Article 12 – paragraph 1 1. Any cooperation arrangement as referred to in Article 9(4)
Amendment 286 #
Proposal for a regulation Article 12 a (new) Article12a Third country regime review 1. ESMA shall submit a report to the European Parliament, the Council and the Commission by [three years after the date of entry into force of this Regulation] on the adequacy of the requirements of Articles 9, 10 and 11 in order that third- country ESG rating providers may offer ther services in the European Union. 2. The Comission shall consider the results of the report and submit, where appropriate, a legislative proposal.
Amendment 287 #
Proposal for a regulation Article 13 – title Register of ESG ratings and ESG data products providers and accessibility of information on the European Single Access Point (ESAP)
Amendment 288 #
Proposal for a regulation Article 13 – paragraph 8 – subparagraph 2 Before developing the draft implementing technical standards, ESMA shall carry out a cost-benefit analysis. For the purposes of point (c), ESMA shall assess the advantages and disadvantages of different machine-readable formats and conduct appropriate field tests in cooperation with ESG rating providers.
Amendment 289 #
Proposal for a regulation Article 14 – paragraph 1 1. ESG ratings and ESG data products providers shall ensure the independence of their rating activities, including from all political and economic influences or constraints. (Amendment applies throughout article 14: ESG ratings and ESG data products providers.)
Amendment 290 #
Proposal for a regulation Article 14 – paragraph 4 4. ESG rating providers shall adopt and implement written policies and procedures that ensure that their ESG ratings are based on a thorough analysis of all relevant information
Amendment 291 #
Proposal for a regulation Article 14 – paragraph 5 5. ESG rating providers shall adopt and implement internal
Amendment 292 #
Proposal for a regulation Article 14 – paragraph 7 7. ESG rating providers shall use rating methodologies for the ESG ratings
Amendment 293 #
Proposal for a regulation 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
Amendment 294 #
Proposal for a regulation Article 14 – paragraph 7 7. ESG rating providers shall use rating methodologies for the ESG ratings they provide that are rigorous, systematic,
Amendment 295 #
Proposal for a regulation Article 14 – paragraph 7 a (new) 7a. ESG rating providers shall make use of the data disclosed under Regulation (EU) 2019/2088 of the European Parliament and of the Council, Regulation (EU) 2020/852 of the European Parliament and of the Council and Directive (EU) 2022/2464 of the European Parliament and of the Council.
Amendment 296 #
Proposal for a regulation Article 14 – paragraph 7 a (new) 7a. ESG rating providers, when providing E, S and G ratings, either aggregated or separately, shall, to the greatest extent possible, take into account all material sustainability information, for each of the materiality dimensions.
Amendment 297 #
Proposal for a regulation Article 14 – paragraph 8 8. ESG rating providers shall review the rating methodologies referred to in paragraph 6 on an on-going basis
Amendment 298 #
Proposal for a regulation Article 14 – paragraph 8 8. ESG rating providers shall review the rating methodologies referred to in paragraph
Amendment 299 #
Proposal for a regulation Article 14 – paragraph 8 8. ESG rating providers shall review the rating methodologies referred to in paragraph
Amendment 300 #
Proposal for a regulation Article 14 – paragraph 9 9. ESG rating providers shall regularly monitor and evaluate the adequacy and effectiveness of the systems, resources and procedures referred to in paragraph 2
Amendment 301 #
Proposal for a regulation Article 14 – paragraph 11 11. ESG rating providers shall
Amendment 302 #
Proposal for a regulation 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 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
Amendment 304 #
Proposal for a regulation Article 14 – paragraph 12 12. ESG rating providers shall not be required to disclose information 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
Amendment 305 #
Proposal for a regulation Article 14 – paragraph 13 13. ESG rating providers shall only make changes to their ESG ratings in accordance with their rating methodologies
Amendment 306 #
Proposal for a regulation 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 307 #
Proposal for a regulation Article 15 Amendment 308 #
Proposal for a regulation Article 15 – paragraph 1 – introductory part 1. ESG rating providers and entities that are part of a group to which an ESG rating provider belongs shall not provide any of the following activities:
Amendment 309 #
Proposal for a regulation Article 15 – paragraph 1 – introductory part 1. Any person directly or indirectly linked to the ESG rating provider
Amendment 310 #
Proposal for a regulation Article 15 – paragraph 1 – introductory part 1. ESG rating providers shall not provide any
Amendment 311 #
Proposal for a regulation Article 15 – paragraph 1 – introductory part 1. ESG rating providers shall not provide
Amendment 312 #
Proposal for a regulation Article 15 – paragraph 1 – point a Amendment 313 #
(a) consulting activities
Amendment 314 #
Proposal for a regulation Article 15 – paragraph 1 – point a (a) consulting activities to investors
Amendment 315 #
Proposal for a regulation Article 15 – paragraph 1 – point b Amendment 316 #
Proposal for a regulation Article 15 – paragraph 1 – point b Amendment 317 #
Proposal for a regulation Article 15 – paragraph 1 – point b (b)
Amendment 318 #
Proposal for a regulation Article 15 – paragraph 1 – point b (b) the issuance and
Amendment 319 #
Proposal for a regulation Article 15 – paragraph 1 – point c Amendment 320 #
Proposal for a regulation Article 15 – paragraph 1 – point c Amendment 321 #
Proposal for a regulation Article 15 – paragraph 1 – point c (c) the development of benchmarks by an administrator of benchmarks as defined in Article 3(1), point (3), of Regulation (EU) 2016/1011 of the European Parliament and of the Council;
Amendment 322 #
Proposal for a regulation Article 15 – paragraph 1 – point d Amendment 323 #
Proposal for a regulation Article 15 – paragraph 1 – point d Amendment 324 #
Proposal for a regulation Article 15 – paragraph 1 – point e Amendment 325 #
Proposal for a regulation Article 15 – paragraph 1 – point e Amendment 326 #
Proposal for a regulation Article 15 – paragraph 1 – point f Amendment 327 #
Proposal for a regulation Article 15 – paragraph 1 – point f Amendment 328 #
Proposal for a regulation 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 329 #
Proposal for a regulation Article 15 – paragraph 1 a (new) Amendment 330 #
Proposal for a regulation Article 15 – paragraph 2 2. ESG rating providers shall ensure that the provision of
Amendment 331 #
Proposal for a regulation Article 15 – paragraph 2 2. ESG rating providers shall ensure that the provision of other services than those referred to in paragraph 1 and 1a does not create risks of conflicts of interest within its ESG rating activities.
Amendment 332 #
Proposal for a regulation 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 333 #
Proposal for a regulation Article 16 – title Rating analysts
Amendment 334 #
Proposal for a regulation Article 16 – paragraph 1 1. ESG rating providers shall ensure that rating analysts
Amendment 335 #
Proposal for a regulation Article 16 – paragraph 1 1. ESG rating providers shall ensure that rating analysts, employees and any other natural person whose services are placed at its disposal or under its control and who are directly involved in the provision of ESG ratings, including analysts directly involved in the rating
Amendment 336 #
Proposal for a regulation Article 16 – paragraph 1 1. ESG rating providers shall ensure that rating analysts, employees and any other natural person whose services are placed at its disposal or under its control and who are directly involved in the provision of ESG ratings, including analysts directly involved in the rating process and persons involved in the provision of scores, are appropriately trained and have the knowledge and experience that is necessary for the performance of the duties and tasks assigned.
Amendment 337 #
Proposal for a regulation Article 16 – paragraph 3 3. The
Amendment 338 #
Proposal for a regulation Article 16 – paragraph 4 – point c (c) have had
Amendment 339 #
Proposal for a regulation Article 16 – paragraph 5 – introductory part 5. ESG rating providers shall ensure that
Amendment 340 #
Proposal for a regulation Article 16 – paragraph 7 7. Where a rating analyst terminates his or her employment with the ESG rating provider and, within one year, joins a rated entity which he or she has been involved in rating, the ESG rating provider shall review the work of the rating analyst over one year preceding his or her departure.
Amendment 341 #
Proposal for a regulation 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
Amendment 342 #
Proposal for a regulation Article 16 – paragraph 8 8. Persons as referred to in paragraph
Amendment 343 #
Proposal for a regulation Article 16 – paragraph 8 8. Persons as referred to in paragraph 1 shall not take up a key management position within a rated entity which they have been involved in rating for
Amendment 344 #
Proposal for a regulation Article 16 a (new) Amendment 345 #
Proposal for a regulation Article 16 a (new) Article16a Use of multiple ESG rating providers 1. Where an entity or investor seeks an ESG rating from at least two ESG rating providers, it shall appoint at least one ESG rating provider with no more than 5 % market share in the Union. 2. ESMA shall annually publish on its website a list of ESG rating providers listed in the register referred to in Article 13(1), indicating their total market share in the Union. 3. For the purposes of this Article, total market share shall be measured by reference to the annual turnover generated from ESG rating activities and ancillary services, at group level in the Union.
Amendment 346 #
Proposal for a regulation Article 17 – paragraph 1 1. ESG ratings and ESG data products providers shall record their ESG rating activities. Those records shall contain the information listed in Annex II. (Amendment applies throughout article 17: ESG ratings and ESG data products providers.)
Amendment 347 #
Proposal for a regulation 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) 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) Amendment 350 #
Proposal for a regulation Article 18 – paragraph 1 1. ESG rating providers shall have in place and publish on their website procedures for receiving, investigating and retaining records concerning complaints made by rated entities.
Amendment 351 #
Proposal for a regulation Article 18 – paragraph 1 1. ESG rating providers shall have in place and publish on their website procedures for receiving, investigating and retaining records concerning non- anonymous complaints
Amendment 352 #
Proposal for a regulation Article 18 – paragraph 2 – point a – point 4 Amendment 353 #
Proposal for a regulation Article 18 – paragraph 2 – point a – point 5 (5) other decisions in relation to the ESG rating that appear inconsistent with the applicable methodologies, policies or procedures of the ESG rating provider;
Amendment 354 #
Proposal for a regulation Article 18 – paragraph 2 – point a – point 5 a (new) (5a) the quality of ESG data distributed to regulated financial undertakings in the EU;
Amendment 355 #
Proposal for a regulation Article 18 – paragraph 2 – point a – point 5 b (new) (5b) the methodology and sources of data used for a specific controversy report;
Amendment 356 #
Proposal for a regulation Article 18 – paragraph 2 – point b (b) complaints are investigated in a timely and fair manner and that the outcome of the investigation is communicated to the complainant within a
Amendment 357 #
Proposal for a regulation Article 18 – paragraph 2 – point c Amendment 358 #
Proposal for a regulation Article 18 – paragraph 2 a (new) 2 a. By XXXX, the ESMA shall establish and operate a complaint mechanism for receiving, investigating and retaining records concerning complaints against ESG ratings or ESG data product providers made regarding ESG ratings or ESG data.
Amendment 359 #
Proposal for a regulation Article 18 – paragraph 2 b (new) Amendment 360 #
Proposal for a regulation Article 18 – paragraph 2 c (new) 2 c. ESMA shall investigate complaints in a timely and fair manner and communicate the outcome of the investigation to the complainant within a reasonable period of time, unless such communication would be contrary to objectives of public policy or to Regulation (EU) No 596/2014 of the European Parliament and of the Council.
Amendment 361 #
Proposal for a regulation Article 19 – paragraph 1 1. ESG ratings and ESG data products providers shall not outsource important operational functions where such outsourcing would materially impair the quality of the ESG ratings and ESG data products provider’s internal control policies and procedures, or the ability of the European Supervisory and Markets Authority (ESMA) to supervise the ESG ratings and ESG data products provider’s compliance with its obligations under this Regulation. (Amendment applies throughout article 19: ESG ratings and ESG data products providers.)
Amendment 362 #
Proposal for a regulation Article 19 – paragraph 1 1.
Amendment 363 #
Proposal for a regulation 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 364 #
Proposal for a regulation Article 20 – paragraph 1 – introductory part 1. ESMA may exempt an ESG ratings and ESG data products provider(s) at its request from complying with some of the requirements laid down in Article 14 where that ESG ratings and ESG data products provider(s) 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
Amendment 365 #
Proposal for a regulation 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 (a) the ESG rating provider is a small
Amendment 367 #
Proposal for a regulation Article 20 – paragraph 1 – point a (a) the ESG rating provider is a small
Amendment 368 #
Proposal for a regulation Article 20 – paragraph 2 Amendment 369 #
Proposal for a regulation Article 20 – paragraph 2 Amendment 370 #
Proposal for a regulation 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 371 #
Proposal for a regulation Article 21 – title Disclosure of the methodologies, models, and key rating assumptions and treatment of controversies used in ESG rating activities to the public
Amendment 372 #
Proposal for a regulation Article 21 – paragraph 1 1. ESG rating providers and ESG data providers shall disclose on their website the methodologies, models and key rating assumptions they use in their ESG rating activities, including the information referred to in point 1 of Annex III.
Amendment 373 #
Proposal for a regulation Article 21 – paragraph 1 1. ESG rating providers shall disclose on their website the methodologies, models and key rating assumptions they use in their ESG rating activities, including how they assessed impact materiality and financial materiality and the information referred to in
Amendment 374 #
Proposal for a regulation 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 375 #
Proposal for a regulation Article 21 – paragraph 1 1. ESG rating providers shall disclose on their website the methodologies
Amendment 376 #
Proposal for a regulation 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 point 1 of Annex III.
Amendment 377 #
Proposal for a regulation Article 21 – paragraph 1 1. ESG rating providers shall disclose, as a minimum, on their website the methodologies, models and key rating assumptions they use in their ESG rating activities, including the information referred to in point 1 of Annex III.
Amendment 378 #
Proposal for a regulation Article 21 – paragraph 1 a (new) Amendment 379 #
Proposal for a regulation Article 21 – paragraph 1 a (new) Amendment 380 #
Proposal for a regulation 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 ESMA shall submit those draft regulatory technical standards to the Commission by
Amendment 382 #
Proposal for a regulation 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 383 #
Proposal for a regulation Article 21 – paragraph 3 a (new) 3 a. ESMA shall develop draft implementing technical standards to specify the data standards and formats for the elements that are to be disclosed in accordance with paragraph 1. ESMA shall submit those draft implementing technical standards to the Commission by XX XXXX XXXX
Amendment 384 #
Proposal for a regulation Article 21 – paragraph 3 a (new) 3 a. ESMA shall develop draft implementing technical standards to specify the data standards and formats for the elements that are to be disclosed in accordance with paragraph 1. ESMA shall submit those draft implementing technical standards to the Commission by XX XXXX XXXX.
Amendment 385 #
Proposal for a regulation Article 22 – title Disclosures to us
Amendment 386 #
Proposal for a regulation Article 22 – paragraph 1 a (new) 1a. Where an ESG rating provider issues an unsolicited rating, it shall state prominently in the credit rating, using a clearly distinguishable different colour code for the rating category, whether or not the rated entity or a related third party participated in the rating process and whether the ESG rating provider had access to the management and other relevant internal documents for the rated entity or a related third party.
Amendment 387 #
Proposal for a regulation Article 22 – paragraph 3 – subparagraph 1 ESMA shall submit those draft regulatory technical standards to the Commission by
Amendment 388 #
Proposal for a regulation Article 22 – paragraph 3 a (new) Amendment 389 #
Proposal for a regulation Article 22 – paragraph 3 a (new) 3 a. ESMA shall develop draft implementing technical standards to specify the data standards and formats for the elements that are to be disclosed in accordance with paragraph 1. ESMA shall submit those draft implementing technical standards to the Commission by XX XXXX XXXX
Amendment 390 #
Proposal for a regulation Article 22 – paragraph 3 a (new) 3 a. ESMA shall develop draft implementing technical standards to specify the data standards and formats for the elements that are to be disclosed in accordance with paragraph 1. ESMA shall submit those draft implementing technical standards to the Commission by XX XXXX XXXX.
Amendment 391 #
Proposal for a regulation 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 392 #
Proposal for a regulation Article 23 – paragraph 1 1. ESG ratings and ESG data products providers shall have in place robust governance arrangements, including a clear organisational structure with well- defined, transparent, and consistent roles and responsibilities for all persons involved in the provision of an ESG rating
Amendment 393 #
Proposal for a regulation Article 23 – paragraph 1 1. ESG rating providers shall have in place robust governance arrangements, including a clear organisational structure with well-defined, transparent, and consistent roles and responsibilities for all persons directly involved in the provision of an ESG rating.
Amendment 394 #
Proposal for a regulation 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 395 #
Proposal for a regulation Article 23 – paragraph 3 – subparagraph 1 Amendment 396 #
Proposal for a regulation 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, ESMA may require the ESG rating provider to take proportionate measures to mitigate that risk
Amendment 397 #
Proposal for a regulation 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
Amendment 398 #
Proposal for a regulation 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, ESMA may require the ESG rating provider to take measures to mitigate that risk.
Amendment 399 #
Proposal for a regulation 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
Amendment 400 #
Proposal for a regulation Article 23 – paragraph 3 – subparagraph 2 Where
Amendment 401 #
Proposal for a regulation Article 23 – paragraph 3 – subparagraph 2 Where a conflict of interest as referred to in the first subparagraph cannot be adequately managed, ESMA
Amendment 402 #
Proposal for a regulation Article 24 – paragraph 1 – introductory part 1. ESG ratings and ESG data products providers shall ensure that their employees and any other natural persons whose services are placed at their disposal or under their control and who are directly involved in the provision of an ESG rating
Amendment 403 #
Proposal for a regulation Article 24 – paragraph 2 2. ESG rating providers shall establish specific internal control procedures to ensure the integrity
Amendment 404 #
Proposal for a regulation Article 24 – paragraph 2 2. ESG rating providers shall establish specific internal control procedures to ensure the integrity and reliability of the employee or person determining the ESG rating, including internal sign-off by management before the dissemination of the ESG rating. ESMA may require ESG rating providers to provide information about these control procedures.
Amendment 405 #
Proposal for a regulation Article 25 Amendment 406 #
Proposal for a regulation Article 25 – title Amendment 407 #
Proposal for a regulation Article 25 – paragraph 1 1. ESG ratings and ESG data product providers shall take steps that are adequate to ensure that: (a) fees charged to clients are fair, reasonable,
Amendment 408 #
Proposal for a regulation Article 25 – paragraph 1 1. ESG rating providers shall take steps that are adequate to ensure that fees charged to clients are
Amendment 409 #
Proposal for a regulation Article 25 – paragraph 1 1. ESG rating providers shall take steps that are adequate to ensure that fees charged to clients are fair, reasonable, transparent
Amendment 410 #
Proposal for a regulation Article 25 – paragraph 1 1. ESG rating providers shall take steps that are adequate to ensure that fees charged to clients are fair, reasonable, transparent, and non-discriminatory
Amendment 411 #
Proposal for a regulation Article 25 – paragraph 2 2. For the purposes of paragraph 1, ESG rating and ESG data providers shall provide ESMA with their fee grid and pricing policy, including fee structure and pricing criteria in relation to ESG data, on an annual basis. ESMA may also require ESG rating providers to provide it with additional documented evidence
Amendment 412 #
Proposal for a regulation Article 25 – paragraph 2 2. For the purposes of paragraph 1, ESMA may require ESG rating providers to provide it with documented evidence, may take supervisory measures in accordance with Article 33, and may decide to impose fines in accordance with Article 34 where it finds that fees from ESG rating providers are not
Amendment 413 #
Proposal for a regulation Article 25 – paragraph 2 2. For the purposes of paragraph 1, ESMA may require ESG rating providers to provide it with documented evidence, may take supervisory measures in accordance with Article 33, and may decide to impose fines in accordance with Article 34 where it finds that fees from ESG rating providers are not fair, reasonable, transparent
Amendment 414 #
Proposal for a regulation Article 25 – paragraph 2 a (new) 2a. Rated undertakings shall be allowed to communicate freely and at no extra cost on their ESG rating, also in relation to the ESG rating of their peer group.
Amendment 415 #
Proposal for a regulation Article 26 – title Non-interference with the data sources or the content of ratings or methodologies
Amendment 416 #
Proposal for a regulation Article 26 – paragraph 1 In carrying out their duties under this Regulation, ESMA, the Commission or any public authorities of a Member State shall not interfere with the content of ESG ratings, ESG data products, or methodologies.
Amendment 417 #
Proposal for a regulation Article 26 – paragraph 1 In carrying out their duties under this Regulation, ESMA, the Commission or any public authorities of a Member State shall not interfere with the content of ESG ratings or methodologies. Rated entities and subscribers shall not interfere with the content of ESG ratings or methodologies.
Amendment 418 #
Proposal for a regulation Article 26 – paragraph 1 In carrying out their duties under this Regulation, ESMA, the Commission or any public authorities of a Member State shall not interfere with the content of ESG ratings or methodologies, provided the latter two comply with the obligations laid down in this Regulation.
Amendment 419 #
Proposal for a regulation Article 27 – paragraph 3 – subparagraph 1 ESMA shall publish an annual report on the application of this Regulation,
Amendment 420 #
Proposal for a regulation Article 30 – paragraph 1 1. ESMA may by simple request or by decision require ESG ratings and ESG data products providers, persons involved in ESG rating and ESG data product activities, rated entities, third parties to whom the ESG ratings and ESG data product providers have outsourced operational functions or activities, and persons otherwise closely and substantially related or connected to ESG ratings and ESG data products providers or ESG rating and ESG data product activities, to provide all information that it needs to carry out its duties under this Regulation.
Amendment 421 #
Proposal for a regulation Article 30 – paragraph 2 – point d (d) set a time-limit within which the
Amendment 422 #
Proposal for a regulation Article 30 – paragraph 2 – point d (d) set a reasonable time-limit within which the information is to be provided and the format in which is to be provided;
Amendment 423 #
Proposal for a regulation Article 30 – paragraph 3 – point d (d) set a time-limit within which the information is to be provided, and in any case not less than 15 days;
Amendment 424 #
Proposal for a regulation Article 30 – paragraph 3 – point d (d) set a reasonable time-limit within which the information is to be provided and the format in which is to be provided;
Amendment 425 #
Proposal for a regulation 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 in
Amendment 426 #
Proposal for a regulation 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 in
Amendment 427 #
Proposal for a regulation 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 428 #
Proposal for a regulation 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 429 #
Proposal for a regulation Article 33 – paragraph 1 – introductory part 1. Where ESMA’ finds that a ESG ratings and ESG data products provider has not complied with its obligations under this Regulation, it shall take one or more of the following supervisory measures:
Amendment 430 #
Proposal for a regulation Article 33 – paragraph 1 – introductory part 1. Where ESMA’ finds that a ESG rating provider has not complied with its obligations under this Regulation, it shall require the ESG rating provider to bring the infrigement to an end. In addition, ESMA may take one or more of the following supervisory measures:
Amendment 431 #
Proposal for a regulation Article 33 – paragraph 1 – point a (a) withdraw the authorisation of the ESG rating provider, making public the reasons for the withdrawal;
Amendment 432 #
Proposal for a regulation Article 33 – paragraph 1 – point d Amendment 433 #
Proposal for a regulation Article 33 – paragraph 3 – point f (f) the impact of the infringement on retail investors’ interests and on other ESG rating users;
Amendment 434 #
Proposal for a regulation Article 33 – paragraph 4 – subparagraph 1 ESMA shall notify any action taken pursuant to paragraph 1 to the person responsible for the infringement without undue delay. ESMA shall publish any such action on its website within
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 436 #
Proposal for a regulation Article 34 – paragraph 1 1. Where ESMA finds that an ESG ratings and ESG data products 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 ratings and ESG data products provider, calculated on the basis of the most recent available financial statements approved by the management body of the ESG rating
Amendment 437 #
Proposal for a regulation 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 438 #
Proposal for a regulation Article 34 – paragraph 1 a (new) 1a. An infringement shall be considered to have been committed intentionally if ESMA finds objectives which demonstrate that a person acted deliberately to commit the infringement.
Amendment 439 #
Proposal for a regulation Article 34 – paragraph 2 Amendment 440 #
Proposal for a regulation Article 34 – paragraph 2 2. Where the ESG ratings provider is a parent undertaking or a subsidiary of a parent undertaking which is required to prepare consolidated financial accounts pursuant to Directive 2013/34/EU, the relevant total annual net turnover shall be either the total annual net turnover, or the corresponding type of income in accordance with the relevant Union law in the area of accounting, according to the most recent available consolidated accounts of the ESG rating provider approved by the relevant management body
Amendment 441 #
Proposal for a regulation Article 35 – paragraph 1 – point a (a) an ESG ratings and ESG data products provider to put an end to an infringement in accordance with a decision taken pursuant to Article 33; (Amendment applies throughout article 35: ESG ratings and ESG data products providers.)
Amendment 442 #
Proposal for a regulation Article 37 – paragraph 3 3. The investigation officer shall have the power to request information in accordance with Article 30 and to conduct investigations and on-site inspections in accordance with Articles 31 and 32. When using those powers, the investigating officer shall comply with Article 29.
Amendment 443 #
Proposal for a regulation Article 37 – paragraph 4 a (new) 4a. Upon completion of his investigation and before submitting the file with his findings to ESMA's Board of Supervisors, the investigating officer shall give the persons subject to investigation the opportunity to be heard on the matters being investigated. The investigating officer shall base his findings only on facts on which the persons subject to investigation have had the opportunity to comment.
Amendment 444 #
Proposal for a regulation Article 37 – paragraph 6 6. Upon submission of the file with his or her findings to ESMA’s Board of Supervisors, the investigation officer shall notify the persons who are subject to the investigation. The persons subject to investigation shall be entitled to have access to the file, subject to the legitimate interest of other persons in the protection of their business secrets. The right of access to the file shall not extend to confidential information affecting third parties.
Amendment 445 #
Proposal for a regulation Article 37 – paragraph 7 7. On the basis of the file containing the investigation officer’s findings and, where requested by the persons concerned after having heard those persons in accordance with Article 38, the Board of Supervisors of ESMA shall
Amendment 446 #
Proposal for a regulation Article 40 – paragraph 1 1. ESMA shall charge fees to the ESG ratings and ESG data products providers in accordance with the delegated act adopted pursuant to paragraph 2. Those fees shall fully cover ESMA’s necessary expenditure relating to the supervision of ESG rating providers and the reimbursement of any costs that the competent authorities may incur carrying out work pursuant to this Regulation, and
Amendment 447 #
Proposal for a regulation Article 40 – paragraph 1 1. ESMA shall charge proportionate fees to the ESG rating providers in accordance with the delegated act adopted pursuant to paragraph 2. Those fees shall
Amendment 448 #
Proposal for a regulation Article 40 – paragraph 2 – subparagraph 2 By
Amendment 449 #
Proposal for a regulation Article 40 – paragraph 2 – subparagraph 2 By XX XXXX XXXX, 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 and respective justification, 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 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 451 #
Proposal for a regulation 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 responsability.
Amendment 452 #
Proposal for a regulation Article 43 – paragraph 1 1. A competent authority of a Member State that finds that acts infringing this Regulation are being, or have been, carried out on the territory of its own or of another Member State shall inform ESMA thereof. A competent authority that considers it appropriate for investigatory purposes may suggest to ESMA that it assesses the need to use the powers under Article 30 in relation to the ESG ratings and ESG data products provider
Amendment 453 #
Proposal for a regulation Article 45 – paragraph 6 6. A delegated act adopted pursuant to Articles 7, 9, 10, 11, 22, 33, 34 and 40 shall enter into force only if no objection has been expressed either by the European Parliament or by the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by [two months] at the initiative of the European Parliament or of the Council.
Amendment 454 #
Proposal for a regulation Article 45 – paragraph 8 a (new) Amendment 455 #
Proposal for a regulation Article 46 A
Amendment 456 #
Proposal for a regulation Article 48 – paragraph 1 1. ESG ratings and ESG data product providers which provided their services at the date of entry into force of this Regulation shall notify ESMA within 3 months if they want to continue offering their services and apply for authorisation in accordance with Article 5. In that case, they shall apply for authorisation within 6 months after the date of application of this Regulation. (Amendment applies throughout article 48: ESG ratings and ESG data products providers.)
Amendment 457 #
Proposal for a regulation Article 48 – paragraph 1 1. ESG rating providers which provided their services at the date of entry into force of this Regulation shall notify ESMA within 3 months if they want to continue offering their services and apply for authorisation in accordance with Article 5. In that case, they shall apply for authorisation within
Amendment 458 #
Proposal for a regulation Article 48 – paragraph 1 1. ESG rating providers which provided their services at the date of entry into force of this Regulation shall notify ESMA within 3 months if they want to continue offering their services and apply for authorisation in accordance with Article 5. In that case, they shall apply for authorisation within
Amendment 459 #
Proposal for a regulation Article 48 – paragraph 1 Amendment 460 #
Proposal for a regulation Article 49 – paragraph 1 1. The Commission shall evaluate the application of this Regulation by [
Amendment 461 #
Proposal for a regulation Article 49 – paragraph 1 a (new) 1 a. At the latest [2 years after entry into force of this Regulation], the Commission shall, in close cooperation with ESMA, publish a report considering whether the scope of this Regulation is sufficient to ensure confidence in the market and reach its objectives, including the need to extend the scope to ESG data providers. The report may be accompanied, if appropriate, by a legislative proposal.
Amendment 462 #
Proposal for a regulation Article 49 – paragraph 2 2. The Commission shall present a report on the main findings of the evaluation to the European Parliament and the Council. In carrying out the evaluation, the Commission shall take into account market developments and the relevant evidence at its disposal. In particular, the Commission shall consider:
Amendment 463 #
Proposal for a regulation Article 49 – paragraph 2 – point i (new) (i) whether the framework facilitates the comparability of ESG ratings; and,
Amendment 464 #
Proposal for a regulation Article 49 – paragraph 2 – point ii (new) (ii) whether ESG data providers should be subject to transparency and conflict of interest requirements.
Amendment 465 #
Proposal for a regulation 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 466 #
Proposal for a regulation Article 49 – paragraph 3 a (new) 3 a. ESMA shall submit a report to the European Parliament, to the Council and to the Commission by [three years after entry into force of this Regulation], assessing whether the scope of this Regulation is sufficient to ensure confidence in the market and reach its objectives, including the need to extend the scope to ESG data providers. The report may be accompanied, if appropriate, by a legislative proposal.
Amendment 467 #
Proposal for a regulation 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 468 #
Proposal for a regulation Article 50 – paragraph 2 It shall apply from [
Amendment 469 #
Proposal for a regulation Article 50 – paragraph 2 It shall apply from [
Amendment 470 #
Proposal for a regulation Annex I – paragraph 1 – point g (g) a description of the procedures and methodologies used to issue and review ESG ratings and ESG data products implemented by the applicant; (Amendment applies throughout Annex 1: ESG ratings and ESG data products providers.)
Amendment 471 #
Proposal for a regulation 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 472 #
Proposal for a regulation Annex I – paragraph 1 – point i a (new) (ia) where applicable, the ESG ratings provided by a third country ESG rating provider belonging to the same group that the ESG ratings provider expects to endorse;
Amendment 473 #
Proposal for a regulation Annex I – paragraph 1 – point j a (new) (ja) where applicable, existing track records of ESG rating activities;
Amendment 474 #
(j a) where applicable, a provisional list of the class of ESG rating the ESG rating provider expects to endorse;
Amendment 475 #
Proposal for a regulation 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 476 #
Proposal for a regulation Annex II – Part 1 – paragraph 1 – point b (b) for each ESG rating in the form of a score, the identity of the persons responsible for the development of the
Amendment 477 #
Proposal for a regulation Annex II – Part 1 – paragraph 1 – point d (d) the account records for each subscriber to the ESG ratings
Amendment 478 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – introductory part In accordance with Article 21 of the Regulation, ESG ratings and data product providers shall, at the minimum, disclose to the public on their website and through the European Single Access Point (ESAP) the following:
Amendment 479 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point a (a) high level overview of the rating methodologies used (and changes thereto), including: (i) whether analysis is backward-
Amendment 480 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point a (a) high level overview of the rating methodologies used (and changes thereto), including: (i) whether analysis is backward-
Amendment 481 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point b Amendment 482 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point b (b)
Amendment 483 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point b (b) high level overview of data processes (data sources, including if they are public or non–public, and if they are sourced from sustainability statements required by Directive (EU) 2022/2464 and Regulation (EU) 2019/2088, estimation of input data in case of unavailability, frequency of data updates);
Amendment 484 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point b (b) high level overview of data processes for establishing ESG ratings (data sources, including if they are public or non–public, and if they are sourced from sustainability statements required by Directive (EU) 2022/2464, estimation of input data in case of unavailability, frequency of data updates);
Amendment 485 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point b a (new) (ba) high level overview of the ESG data product processes (sources, frequency of update) and of methodologies used (and changes thereto) for processed data (including estimated data);
Amendment 486 #
Proposal for a regulation 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 (c) information on
Amendment 488 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point c a (new) (c a) whether and to which extent financial materiality is taken into account;
Amendment 489 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point d (d) information on the ratings’ objective, clearly
Amendment 490 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point d (d) information on the ratings’ objective, clearly marking whether the rating is assessing risks, impacts or
Amendment 491 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point f (f) in the case of an aggregated ESG rating, weighting of each the three overarching
Amendment 492 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point f (f) in the case of an aggregated ESG rating, the rating given to the individual E, S and G factors, the weighting of the three overarching ESG factors categories (e.g., 33% Environment, 33% Social, 33% Governance), and the explanation of the weighting method, including weight per individual E, S and G factors;
Amendment 493 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point g a (new) (ga) an explanation about the extent to which the alignment with a 1.5°C or below 2°C pathway is integrated in the methodology and how it is weighted;
Amendment 494 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point i (i) Where applicable, reference to the use of Artificial Intelligence (AI) in the data collection or rating/scoring process, with the reference comprising information such as the degree of support, data and places of use;
Amendment 495 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point j Amendment 496 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point j Amendment 497 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point j (j)
Amendment 498 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point k (k) any limitation in data sources used
Amendment 499 #
Proposal for a regulation Annex III – Part 1 – paragraph 1 – point k a (new) (ka) any revisions of the rating of a rated entity and the factors contributing to this revision.
Amendment 500 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – introductory part In addition to the elements referred to in Article 22 of the Regulation,
Amendment 501 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point a – introductory part (a) a more granular overview of the rating methodologies used (and changes thereto) per E, S and G factor and in aggregate, including:
Amendment 502 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point a – point 1 (1)
Amendment 503 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point a – point 2 a (new) (2a) whether the analysis looks at potential material financial risk to the rated entity, or potential material impact of the rated entity on the environment and society in general, or both, the weighting of the two factors, and the explanation of the weighting method, including weight per factor;
Amendment 504 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point a – point 2 a (new) (2a) the industry classification used for the rated undertaking and why this classification is relevant,
Amendment 505 #
Proposal for a regulation 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) (7a) any errors in its ESG rating methodologies or in their application.
Amendment 507 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point a – point 7 a (new) (7 a) timing of data used for evaluation.
Amendment 508 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point a a (new) (a a) a more granular overview for users of ESG data products of the methodology, models and key assumptions used to determine the processed data (including estimated data, proxies, sectoral data). The methodology shall be described for each relevant type of processed data;
Amendment 509 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point b – introductory part (b) a more granular overview of data processes, for establishing ESG ratings or for delivering ESG processed data for users of ESG data products, including:
Amendment 510 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point b – point 1 (1) more detailed explanation of data sources used – including whether public or non-public, mentioning whether derived from the sustainability reporting standards developed pursuant to Article 29b of Directive 2013/34/EU /Taxonomy/SFDR], or from another norm of reporting,
Amendment 511 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point b – point 2 (2) where applicable the use of estimation
Amendment 512 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point b – point 3 (3) the policies for updating raw and estimated data and revising historical data, date of last updates
Amendment 513 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point b – point 4 (4) data quality controls, including the frequency thereof, and data governance, including the remediation process,
Amendment 514 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point b a (new) (b a) for users of ESG raw data products, a more granular overview of the raw data process including: - the data collection process, whether the information publicly available or not, - the update process, - the control and remediation process, - how “non material” information (as per the reporting entity) are considered;
Amendment 515 #
(c) where applicable, information about the engagement
Amendment 516 #
Proposal for a regulation 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.
Amendment 517 #
Proposal for a regulation Annex III – Part 2 – paragraph 1 – point d (d) where applicable, an explanation of any AI methodology used in
Amendment 518 #
Proposal for a regulation Annex III – Part 2 a (new) 2a Periodic disclosures to ESMA An ESG rating provider and an ESG data product provider shall provide annually, by 31 March, to ESMA the following information: (a) List of fees charged to each client to access ESG ratings and scores for subscriber-pay model or fees charged to entities for individual ESG rating or score in an issuer-pay model; (b) Its pricing policy, including the fees structure and pricing criteria in relation to ESG ratings and scores.
Amendment 98 #
Proposal for a regulation Citation 1 Having regard to the Treaty on the Functioning of the European Union, and in particular Article
Amendment 99 #
Proposal for a regulation Citation 1 Having regard to the Treaty on the Functioning of the European Union, and in particular Article
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