Eumedion favours self-regulation of ESG rating providers
News · 07-06-2022
Eumedion sees merit in establishing a self-regulation mechanism for ESG rating providers rather than a legislative intervention in the EU, as stated today in its response to the targeted consultation of the European Commission on the functioning of the ESG ratings market in the European Union and on the consideration of ESG factors in credit ratings.
The ESG data and rating market has become significantly more important over the last few years, with growing demand from users for more and high-quality data and company performance evaluations. A targeted EU intervention based on a self-regulation approach (preferably a code of conduct required through an EU Directive, similar to the system put in place regarding the proxy advisory market via the revised Shareholders’ Rights Directive) is warranted to assure that the growing need for high-quality ESG data and ratings is met and that alignment with the broader EU objectives on sustainability and the role of the financial markets therein is promoted. In its response, Eumedion also emphasises that drafting a code of conduct should preferably be an industry-led process, with input from and/or overseen by relevant stakeholders.