Source: European Commission, Proposal for a Regulation on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities, COM(2023)314.
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
This proposal is an integral part of the European Commission’s renewed sustainable finance strategy adopted in July 2021.
Environmental, social, and governance (ESG) investing, that is, investing which takes ESG factors into account when making investment decisions (also referred to as sustainable investments), 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.