While many market players rely on ESG ratings in their investment decisions, several challenges still prevail in the ESG ratings’ market. The lack of transparency on the characteristics of the ESG ratings, their methodologies, and data sources, have all undermined the usability and users’ confidence in some the ratings. Accordingly, users are not able to take well informed investment decisions with regards to the ESG-related performance of their investments. Amidst the increased use of ESG ratings and the prevailing market challenges, the European Commission has been working on regulating the ESG ratings’ market as part of its renewed Sustainable Financing Package. This presentation aims to provide an overview on the European and International ESG ratings’ market, highlighting some key figures, challenges, and areas of improvement. In addition, the presentation sheds the light on the EC’s Proposal for a Regulation on the transparency and integrity of ESG rating activities that lays down requirements for EU ESG rating providers to ensure quality and reliability of the service provided.
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