Transparency Key to ESG Ratings Rules – Eurosif

Responding to the European Commission’s public consultation on the functioning of the ESG ratings market in the EU and ESG factors in credit ratings, the European Sustainable Investment Forum (Eurosif) emphasised the importance of ensuring maximum transparency of the data methodologies of third party vendors. “Any regulatory intervention should introduce strong transparency requirements about the monitoring and managing of actual and potential conflicts of interests,” the response said. Scores and ratings currently provided to investors by third parties are largely informed by “opinions”, Eurosif noted, but achieving “full comparability and corelation between ratings should not be the stated aimed of any regulatory intervention”. Some of the differences in scores will likely disappear as a growing number of companies are expected to produce more granular reports on sustainability risks and impacts, Eurosif added. “The main objective of any regulatory intervention should be to bring more transparency and robustness on the ESG ratings provided to the market, thereby creating stronger market incentives to increase the quality of ratings and services made available to investors,” Eurosif said. The consultation closes today (10 June). 

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