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Environmental, social and governance (ESG) ratings and sustainability risks in credit ratings

Banking and financial services

This initiative aims to strengthen the reliability and comparability of environmental, social and governance (ESG) ratings and to ensure that relevant ESG risks are captured in credit ratings in a transparent manner.

Links

Public consultation

ID: 13330

Lobbying Activity

46 responses

Transport and Environment Demands Stricter EU ESG Rating Standards

Transport and Environment (European Federation for Transport and Environment), 29 Aug 2023

The organization demands minimum quality thresholds and double materiality to ensure ratings reflect actual impacts. They propose linking environmental scores directly to 1.5°C pathways and fossil fuel phase-outs.
These measures would help the organization highlight greenwashing and pressure the transport sector to decarbonize.
Major transport companies with slow emission reduction plans would face significantly lower sustainability scores.

European Industry Chiefs Seek Stricter ESG Rating Standards

European Round Table for Industry, 1 Sept 2023

The organization requests minimum standards for ESG assessments, including forward-looking information and sector-specific requirements. They want rating providers to disclose question-level results and weightings, plus establish formal feedback mechanisms with rated companies. They emphasize ratings should assess transformation preparedness, not just backward-looking data.
This would reduce resources spent responding to multiple unsolicited ratings and prevent inaccurate assessments.
Investors lose independent scrutiny as companies gain more control over rating processes.

Insurance Europe urges regulation of raw ESG data products

Insurance Europe, 31 Aug 2023

The federation requests that raw ESG data and estimates be included within the regulatory scope. They also call for closing loopholes involving subsidiaries and ensuring users have full access to rating methodologies.
This would reduce insurers' exposure to greenwashing risks and improve the reliability of investment data.
Dominant data providers might lose revenue as fees must reflect actual costs.

ENGIE demands more detailed transparency for European ESG ratings

ENGIE, 1 Sept 2023

ENGIE requests a detailed presentation of methodologies including rating formulas and numerical thresholds. They oppose requirements for separation from credit ratings to maintain integrated performance. Agencies using artificial intelligence should provide more details on data collection and evaluation.
Standardized rules help the company monitor its sustainability performance internally using transparent tools.
Rating agencies lose proprietary advantages by being forced to disclose specific rating formulas.

Finance Industry Seeks Clarity on ESG Rating Rules

Association for Financial Markets in Europe, 1 Sept 2023

AFME requests the scope be clarified to avoid capturing regulated financial undertakings already subject to existing requirements. They seek efficient interactions between ratings providers and rated entities, and a workable third-country regime with interoperable requirements.
This would exempt their members from duplicative regulatory requirements they already face.

DHL Group Demands Standardized Rules for ESG Rating Agencies

DHL Group, 25 Aug 2023

DHL Group advocates for common principles to prevent agencies from issuing substantially different ratings for the same issuer. They argue that ESG ratings should be solely reliant on public information to improve comparability. They also demand well-substantiated controversy reports to ensure fair evaluations.
Standardized methodologies would reduce the significant burden and resource strain of managing multiple agencies.
Rating agencies would lose their competitive advantage from using proprietary methodologies and non-public data.

Medef demands ESG rating alignment with existing reporting standards

Mouvement des Entreprises de France, 1 Sept 2023

Medef requests that the regulation aligns with the CSRD to prevent redundant data requests. They also advocate for mandatory dialogue with companies before ratings are finalized.
This alignment would lower operational costs by preventing multiple reporting requirements for businesses.
ESG data providers would face new disclosure obligations regarding their methodologies and sources.

German insurers urge EU to regulate raw ESG data

Gesamtverband der Deutschen Versicherungswirtschaft e.V., 30 Aug 2023

The GDV calls for the inclusion of raw ESG data products within the regulation's scope. Rules should cover entire corporate groups to prevent agencies from bypassing transparency standards. They insist that data fees be cost-based and not charged per specific use.
Standardized raw data helps insurers fulfill regulatory reporting mandates while reducing their operational costs.
Rating agencies lose the ability to charge multiple fees or bypass rules using subsidiaries.

Consultation response

Verband der Chemischen Industrie e.V., 11 Aug 2023

ESG ratings have become established on the capital market, which make it their business to evaluate the sustainability performance of companies. The ratings often form the basis for investment decisions by sustainability-oriented investors to select suitable securities. In addition, the ESG ratings…

LSEG Urges Proportionality and Clearer Definitions in ESG Rules

London Stock Exchange Group, 1 Sept 2023

LSEG requests clearer definitions for ESG scores and ratings to ensure legal certainty. They advocate for a proportionate regulatory framework aligned with international standards to support innovation. Finally, they propose extending the implementation timeline to eighteen months.
These changes would protect LSEG’s automated scoring models and reduce potential compliance costs.
End users would suffer from higher costs and reduced market competition under stricter rules.

Finance Denmark urges ESG rating and credit rating alignment

Finance Denmark, 1 Sept 2023

The regulation of ESG ratings must be symmetrical with the regulation of traditional credit rating agencies. Providers of ESG data should also be covered by the proposal to improve transparency. Rating providers should be required to have a physical presence within the EU.
Financial institutions would benefit from more predictable, high-quality data for investment decisions.
Non-EU providers would lose their current exemption from strict transparency and disclosure requirements.

Consultation response

PwCIL, 6 Jun 2022

PwC International Ltd (PwC), on behalf of the PwC network, welcomes the European Commission’s initiative to improve the quality and transparency of ESG ratings and sustainability risk in credit ratings. Please find attached our response to the call for evidence.

German fund industry demands ESG raw data regulation expansion

BVI Bundesverband Investment und Asset Management e.V., 31 Aug 2023

BVI requests extending the regulation to cover ESG raw data products. They advocate refining exemptions for internal ratings and requiring providers to publish price lists.
This expansion would provide fund managers with more comparable data for regulatory compliance.
Large rating agencies and US-based providers would face higher compliance costs and oversight.

Co-operative banks demand recognition of unique governance in ESG ratings

European Association of Co-operative Banks, 1 Sept 2023

The association calls for rating methodologies to explicitly account for the democratic and long-term nature of co-operative banking. They also request mandatory transparency regarding rating data and the ability for banks to correct errors before publication.
This would improve their ratings by ensuring their stable business model is recognized as a positive factor.
Foreign rating providers would lose their current regulatory advantage over European-based competitors.

Deutsches Aktieninstitut Urges Stricter Standards for ESG Rating Providers

Deutsches Aktieninstitut, 11 Aug 2023

The group wants controversy reports included in the rules and a formal right for companies to correct errors before ratings go public.
This would reduce the heavy cost of fixing misleading scores based on incorrect or incomplete data.
ESG data and rating providers would face increased compliance costs and stricter operational oversight.

European fund managers urge including raw data in ESG rules

European Fund and Asset Management Association, 1 Sept 2023

EFAMA recommends expanding regulation to include raw data providers for better market integrity. They also seek clearer definitions and exemptions for already regulated internal financial models.
Asset managers would gain legal certainty and protection against liability for unintentional greenwashing.
Large ESG data providers would lose revenue from opaque pricing and high fee inflation.

European savings banks demand right to review ESG ratings

European Savings and Retail Banking Group, 3 Aug 2023

Rating providers should provide draft reports to the rated undertaking to allow for review and correction. This helps avoid potential misinterpretation of data during the assessment process.
Banks could prevent negative ratings resulting from data errors or the non-disclosure of confidential documents.
ESG rating agencies would lose autonomy and face increased administrative burdens during report preparation.

BPCE urges EU to regulate ESG data providers

BPCE, 31 Aug 2023

BPCE requests extending the proposal's scope to include ESG data providers to ensure reliability and prevent greenwashing. They recommend applying transparency, governance, and record-keeping requirements to these data firms. Additionally, they advocate for maintaining authorized discussions between agencies and rated companies to ensure mutual understanding.
The group would benefit from lower data costs and more accurate information for their sustainability disclosures.
Dominant non-EU data firms would face stricter oversight and costs from mandatory local data storage.

Consultation response

CAISSE DES DEPOTS, 3 Jun 2022

The Caisse des Dépôts Group is the French long-term investor dedicated to the general interest, major financing actor of sustainability in France with a long-standing commitment to responsible investment. CDC and its subsidiaries both use and are covered by ESG rating in particular because CDC…

European public banks urge mandatory engagement in ESG rating regulations

European Association of Public Banks and Funding agencies AISBL, 1 Sept 2023

The EAPB requests mandatory individual engagement between rating providers and rated entities. They also call for public consultations on methodology changes and a civil liability clause for rating agencies.
Public banks would gain the ability to correct business model misunderstandings and contest inaccurate categorizations.
ESG rating providers would face increased costs and legal risks from mandatory cooperation and liability rules.

ISDA seeks clearer scope and longer timelines for ESG rules

International Swaps and Derivatives Association, 1 Sept 2023

ISDA requests excluding products already under existing supervision to prevent regulatory overlap. They also propose extending the implementation period to 18 months for operational feasibility.
These changes would prevent banks and investment firms from facing redundant regulatory burdens and costs.
ESG rating users may lose access to diverse services if strict separation requirements reduce market competition.

Luxembourg fund group wants ESG rating exemptions for managers

Association Luxembourgeoise des Fonds d'Investissement, 31 Aug 2023

ALFI seeks exemptions for internal assessments and proprietary investment research tools. They want the regulation to cover commercial data products and raw environmental data. They also suggest adding specific green investment percentages to public disclosure requirements.
These exemptions would allow funds to maintain proprietary analysis without extra disclosure burdens.
Commercial data providers would face stricter rules and mandatory transparency for their scoring methods.

French insurers urge EU to regulate ESG raw data products

Fédération Française de l'Assurance, 29 Aug 2023

The federation calls for ESG raw data and other data products to be included in the regulation. They seek common standards and transparency to ensure data reliability for sustainable investment strategies.
Standardized data helps insurers meet reporting requirements and avoid greenwashing risks.
ESG data vendors will face new transparency obligations, fee oversight, and conflict-of-interest rules.

PensionsEurope urges EU to include data in ESG regulations

PensionsEurope, 1 Sept 2023

The scope must cover ESG data alongside ratings to ensure market reliability. Pension funds should be allowed to continue relying on internal risk assessments. Mandatory transparency on fee structures is needed to ensure fair product pricing.
This prevents rising costs for pension funds and protects beneficiary pension payments.
Large rating agencies lose market dominance through stricter competition and equivalence rules.

MSCI Demands Stronger Protections for Proprietary ESG Rating Models

MSCI Limited, 1 Sept 2023

MSCI requests excluding raw ESG data from regulation to avoid an overly broad framework. They seek to remove requirements to disclose proprietary models and cost-based fee structures. Finally, they propose extending the implementation timeline to 18 months.
They would protect trade secrets and avoid strict caps on their service fees.
Public users lose access to detailed information regarding the providers' underlying cost structures.

Consultation response

Związek Banków Polskich, 2 Jun 2022

Szanowni Państwo, dziękujemy za możliwość udziału w tej konsultacji. W załączniku przekazuję stanowisko Związku Banków Polskich.

Swedish securities association demands fair fees for ESG ratings

Swedish Securities Markets Association (Swedish: Föreningen Svensk Värdepappersmarknad), 13 Aug 2023

SSMA supports exempting investment research from these rules to avoid overlapping requirements. They request robust regulations on fees and transparency regarding rating methodology changes. Providers must allow companies to verify and correct information before publication.
The association avoids redundant regulation and protects members from excessive market data costs.
Dominant global providers might lose the ability to charge non-transparent bundled fees.

Consultation response

ČEZ, a.s., 6 Jun 2022

ESG Rating Methodology If companies are rated based on publicly available information, methodologies for assessment of the information should also be public. There should be standardized metrics and clearly defined requirements, so that benchmarking is reliable. Discrepancies in ESG Rating…

Consultation response

EcoVadis, 1 Sept 2023

EcoVadis endorses the intent of the European Commissions proposal to regulate the activities of environmental, social and governance (ESG) ratings providers. We welcome the introduction of regulation to improve the credibility of the ESG ratings sector - beyond its value-add in the financial…

Assogestioni Urges Broader Scope for EU ESG Rating Regulation

Assogestioni - Italian Investment Management Association, 1 Sept 2023

The organization requests broadening the regulation's scope to include ESG data estimates while providing clearer exemptions for internal ratings used by investment firms. They also advocate for a level playing field between EU and non-EU providers and standardized transparency for service contracts.
Asset managers would benefit from more reliable data for investment decisions and reduced legal friction in their own client reporting.
Third-country ESG providers would face stricter compliance burdens, losing the competitive advantage of only following voluntary international standards.

Reclaim Finance urges strict standards to prevent ESG greenwashing

Reclaim Finance, 24 Aug 2023

The organization calls for harmonized methodologies and baseline standards to make ratings greenwashing-proof. They recommend disaggregating scores so users can evaluate environmental and social impacts separately. They also propose mandatory weightings, requiring environmental factors to represent at least one third of ratings.
Harmonized rules would prevent greenwashing and ensure ratings accurately reflect climate transition risks.
Fossil fuel developers would see their scores drop under stricter environmental criteria.

German public insurers call for broader ESG rating rules

Verband Öffentlicher Versicherer, 1 Sept 2023

They propose expanding the regulation to include all non-public ESG information. They also want explicit legal safeguards for smaller rating providers.
Better market competition would lower costs for insurers purchasing sustainability data.
Large data firms lose their market power as natural monopolies are restricted.

Consultation response

Global Legal Entity Identifier Foundation, 1 Jun 2022

The Global Legal Entity Identifier Foundation (GLEIF) is pleased to provide comments to the European Commission's Initiative titled ESG ratings and sustainability risks in credit ratings. GLEIF will focus its comments on using the Legal Entity Identifier (LEI) as a data element in ESG reporting to…

CDP urges more transparency in EU ESG rating methodologies

CDP Worldwide (Europe) gemeinnützige GmbH, 1 Sept 2023

CDP supports regulation focusing on improved transparency of methodologies around ESG ratings and scores. They strongly recommend a voluntary code of conduct for ESG data products to complement the rules. Additionally, they call for clearer definitions of third-party and consulting services to manage conflicts.
Scientific alignment of ratings would better support global environmental decision-making goals.
Rating agencies with commercial ties to credit clients face stricter conflict-of-interest oversight.

Consultation response

Dutch Fund and Asset Management Association, 1 Sept 2023

Executive summary DUFAS and its members welcomes the proposal for regulation on the transparency and integrity of ESG rating activities. ESG ratings and ESG data are important for asset managers. DUFAS and its members emphasize therefore the need for a well-functioning ESG ratings market that…

Green REV Institute Urges Mandatory ESG Metrics for Food

Green REV Institute, 29 Aug 2023

The organization calls for mandatory minimum requirements and specific indicators for food systems. They want ratings to reflect the ratio of plant-based versus animal protein production.
This would expose the high environmental risks associated with industrial livestock farming.
Retailers and industrial farms would face stricter scrutiny of their meat marketing.

Consultation response

Fitch Ratings Ltd, 31 Aug 2023

Fitch Ratings welcomes the opportunity to provide the attached feedback on the proposal for a regulation on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities.

Consultation response

Scope Group, 1 Sept 2023

Scope Group welcomes the European Commissions initiative to regulate the ESG rating market and improve transparency. We believe that this will help establish credibility to investing aligned with ESG goals and contribute to tackling greenwashing practices. The Commissions proposal will go a long…

Consultation response

Associazione Italiana Private Banking, 31 Aug 2023

Please find enclosed the AIPB (Italian Association of Private Banking) feedback on "Sustainable finance environmental, social and governance ratings and sustainability risks in credit ratings". Best regards AIPB

Consultation response

Stichting Onderzoek Multinationale Ondernemingen, 1 Sept 2023

Regulating the ESG industry is overdue given its increasing use clear evidence of grave and fundamental problems, and the serious abuse and confusion about what ESG ratings mean. The proposed Regulation will only tackle part of the problems by requiring more and better transparency, general quality…

Consultation response

Fédération Européenne des Conseils et Intermédiaires Financiers, 1 Sept 2023

On 13th June 2023, the European Commission presented a proposal for a regulation on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities, as part of its renewed sustainable finance strategy, which was launched in 2021. With this response to the…

Consultation response

European Association of Sustainability Rating Agencies, 31 Aug 2023

The attached document represents the response to the EC Consultation from EASRA, the newly formed European Association of Sustainability Rating Agencies. EASRA currently has 6 member firms, each of which is a provider of ESG ratings in the EU and beyond, and this submission represents the…

Consultation response

Stichting Onderzoek Multinationale Ondernemingen, 6 Jun 2022

As an expert research institution with more than 30 years of experience investigating the impacts of multinational companies, The Centre for Research on Multinational Corporations (SOMO) considers that there is, within the European Commission’s proposals, a fundamental misunderstanding about how…

Consultation response

Eumedion, 24 Aug 2023

Eumedion, representing the interests of institutional investors with a long-term investment horizon and collectively with a more than 8 trillion global investment portfolio, welcomes the European Commissions efforts to increase the transparency and integrity of the ESG ratings market. While…

Consultation response

maki Consulting GmbH, 6 Jun 2022

maki Consulting sees improving the reliability and comparability of ESG ratings as a highly relevant aim at EU level (and beyond), given the complete lack of comparability and the heterogeneity of the reliability of the ratings. We want to highlight two aspects, one of which that plays a smaller…

Consultation response

Global Institute for Structure relevance, Anonymity and Decentralisation i.G., 3 Jun 2022

>>Challenges: GISAD welcomes the intention of the EU Commission to develop and standardise ESG ratings. Already in 2017, GISAD proposed in its policy statement at https://gisad.eu/wp-content/uploads/2021/08/taking-the-economy-and-society-into-the-digital-transformation.pdf to introduce a key…