On Tuesday 7 November, members of the European Parliament’s Committee on Economic and Monetary Affairs (ECON) examined the draft report and amendments on the regulation on rating agencies with regard to environmental, social and governance (ESG) criteria (see EUROPE 13270/26). The MEPs have agreed on the substance of the text and still have to deal with methodology and transparency.
Presented in June by the European Commission (see EUROPE 13200/14), the regulation proposes a framework and greater transparency for the various CRA rating indices and defines what they correspond to.
The rapporteur, Aurore Lalucq (S&D, French), underlined the “excellent working basis of the proposal”, which is consensual within ECON. “The European Commission's text comes at just the right time [...] when it was becoming urgent to establish clear rules and improve transparency requirements for a sector torn between accusations of greenwashing and ‘woke capitalism’,” she said.
José Manuel García-Margallo (EPP, Spanish) announced that he wanted to return to transparency, methodology and relations between agencies and companies. He called for an impact assessment to better define the scope of application. Dorien Rookmaker (ECR, Dutch) also argued in favour of a restricted scope of application.
Mr García-Margallo suggested inviting the European Securities and Markets Authority (ESMA) to the discussions, particularly with regard to the authorisation of companies from third countries. This proposal pleased the rapporteur.
With regard to the methodologies used by the rating agencies, the rapporteur wishes to maintain the non-interference clause suggested by the Commission, but has proposed “making the disclosure requirements stricter and more instructive”. Mr García-Margallo agreed: “The EPP supports the non-regulation of ESG rating agencies, to avoid this promising sector being tarnished by poor regulation, as happened to rating agencies during the financial crisis.” He believes that innovation must also be protected.
Billy Kelleher (Renew Europe, Irish) and Ms Rookmaker also felt that over-regulation should be avoided. “ Ever more detailed legislation will not hinder international unintentional misleading sustainability claims but instead risk making things more expensive and bureaucratic and give big companies advantages of smaller ones,” said the latter in defence. She stressed the need for “a clear, simple and realistic definition to ensure legal certainty and avoid abuse”.
Parliament’s position on this regulation will be put to the vote on Tuesday 28 November in ECON, and in the plenary session in December.
Read the proposed amendments: https://aeur.eu/f/9ft (Original version in French by Anne Damiani)