The EACB wishes to highlight the importance of taking into account the particularities of governance models (cooperative, mutuals) when it comes to assessing the “G” in “ESG”. We take the view that regulation should apply proportionately depending on the size, challenges and risks faced by organisations. Crucially, cooperative governance aspects should be properly taken into account in the context of the proposed Regulation through a specific recital, underlining that company models such as cooperatives and mutuals should be adequately reflected in providers’ methodologies. This should also be made explicit in the upcoming Level 2 legislation specifying the requirements for ESG providers’ assessment methodologies.
In general, the EACB welcomes the Commission’s proposal as it will increase reliability of the ESG ratings which inform investment decisions throughout the EU. This will enable users, investors and rated entities to take informed decisions as regards ESG-related risks, impacts and opportunities through enhanced transparency of assessment methodologies.
ESG rating providers should be required to clearly disclose their level of independence and should be subject to specific communication rules (entities should be notified when a rating is being conducted and should be involved in a dialogue).
We fully support that the Regulation should not cover ratings developed in-house by financial undertakings for their internal purposes or for providing in-house financial services and products, as this is not the topic covered by the current proposal. Introducing such requirements in the proposal at hand would only create confusion and interfere with banks’ practices in a disproportionate manner.