ABSTRACT – This contribution considers Regulation (EU) 2024/3005 on the transparency and integrity of environmental, social, and governance (ESG) rating activities, which addresses a regulatory gap in a fast-expanding sector of growing significance for the capital markets. It sets out the key elements of the new framework, starting with the introduction of a harmonised definition of “ESG rating”. It describes the authorisation regimes to which entities wishing to professionally engage in ESG rating activities within the Union are subject to. The contribution pays particular attention to the regulation’s requirements designed to ensuring transparency, reliability and independence in carrying out these activities, as well as the introduction of a continuous supervisory mechanism, entrusted to the European Securities and Markets Authority (ESMA). Finally, the regulation is analysed as a tool not only to ensure the transparency and integrity of ESG ratings within the Union but also as a means to steer the allocation of capital, irrespective of its geographical origin, towards activities aligned with the Union’s Green Deal and sustainability (particularly environmental) objectives.
