On March 11, the IIF submitted a comment letter to the European Securities and Market Authorities (ESMA) in response to its Call for Evidence on Market Characteristics for ESG Ratings Providers in the EU.

In the letter, the IIF provides international perspectives on the market for ESG ratings in the EU and high-level views on the significance of ESG ratings for both EU and non-EU domiciled financial institutions.

The comment letter describes why, given the early stage of maturity and evolving market practices on ESG ratings in the EU and globally, there is a strong case for allowing the ESG ratings industry to become more mature and transparent in a market-led way, supported by regulatory  safeguards  in  areas  such  as  transparency, governance, engagement   with covered entities, and fair and transparent commercial practices. It also emphasizes the importance of a globally consistent policy approach to ESG ratings, and highlights the need for any potential actions by ESMA or the European Commission to be aligned with the International Organization of Securities Commissions’ (IOSCO) 2021 recommendations on the topic.