October 15, 2025 – The European Securities and Markets Authority (ESMA) has published the final message on the draft regulatory technical standards (RTS) to ensure the smooth implementation of the Regulation of the European Parliament and of the Council (EU) 2024/3005 on the transparency and integrity of environmental, social and governance (ESG) rating activities.

This regulation, which was published in the Official Journal of the European Union on 12 December 2024 and entered into force on 3 January 2025, will apply from 2 July 2026. Its main objective is to establish a common regulatory approach to strengthen the integrity, transparency, comparability (where possible), accountability, reliability, good governance and independence of ESG rating activities, thereby contributing to the EU agenda on sustainable finance.

ESMA has developed draft technical standards in key areas: authorisation and recognition (Articles 6(3) and 12(9), separation of activities (Article 16(5)) and disclosure of information (Articles 23(4) and 24(3). A public consultation on these proposals was conducted in May 2025 and received 57 responses from a wide range of stakeholders. In response to the comments, ESMA has revised the proposals to strike a balance between the objectives of the Regulation and the interests of relevant stakeholders.

Simplification of authorisation and separation of activities

In the area applications for authorisation and recognition Some information requirements have been simplified and removed to reduce administrative burden. For example, ESMA has merged the powers for authorisation and recognition into a single draft RTS, thereby contributing to reducing burden. The revisions have reduced the scope of the requirement to demonstrate ownership links under Annex II (Part D) to only parent undertakings and subsidiaries, while deleting the requirement for other affiliated entities. The requirement to submit information on employees (Part G) has also been simplified, requiring only a description of the number, training and experience of employees, broken down into analysts and other employees directly involved in ESG rating activities, rather than detailed data on each individual. The demonstration of the integrity of senior management has also been adjusted, limiting it to a selected list of financial crimes and introducing flexibility as to the countries from which records are submitted.

Regarding division of activities, ESMA has maintained the requirement for physical separation of staff. However, it has responded to concerns about disproportionateness by moving to a principled approach that aims to ensure independence and impartial decision-making. Physical separation can be achieved by simple measures such as the allocation of different floors or separate office wings, or the use of partitions. It has also introduced an obligation for staff involved in the assessment process of the rated item to submit a self-declaration that they do not provide other activities once every 12 months, clarifying the initially vague notion of “at regular intervals”.

Key disclosure requirements

RTS proposals in the area disclosure of information (Articles 23(4) and 24(3)) aim to increase the transparency and comparability of ESG ratings. ESG rating providers must disclose methodologies, models and key rating assumptions. Key requirements include a description of the risks and impacts that the rating covers, where it assesses risks or impacts. Providers must also describe how they take into account financial and impact materiality according to the principle of double materiality. The disclosure of information should be arranged in accordance with the sequence set out in the table in the Annex to the RTS. ESMA allows providers to use cross-references and hyperlinks to relevant information on their website.

An important change in the draft RTS for disclosures was made in response to concerns about excessive administrative burden and disclosure of sensitive information: ESMA has removed the requirement for providers to disclose which specific rated items or issuers they rate. Instead, a description of the different types of rated items to which the methodology applies is required as part of the general methodological disclosures.

Next steps

ESMA will submit draft technical standards to the European Commission for adoption by means of a delegated regulation by the end of October 2025. These technical standards will also be subject to scrutiny by the European Parliament and the Council. The entire regulatory framework will apply from 2 July 2026. JRi

(The article was prepared using information from documents ESMA84-2037069784-1184 and EU Regulation 2024/3005)