Activities of Dorien ROOKMAKER related to 2023/0177(COD)
Shadow reports (1)
REPORT on the proposal for a regulation of the European Parliament and of the Council on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities
Amendments (69)
Amendment 102 #
Proposal for a regulation
Recital 3
Recital 3
(3) Achieving SDG objectives in the Union requires the channelling of capital flows towards sustainable investments. It is important to exploit fully the potential of the internal market for the achievement of those goals, while balancing these objectives with economic concerns. In that context, it is crucial to remove obstacles to the efficient movement of capital towards sustainable investments in the internal market and to prevent such obstacles from emerging.
Amendment 105 #
Proposal for a regulation
Recital 4
Recital 4
(4) The EU’s approach to sustainable and inclusive growth is anchored in the 20 principles of the European Pillar of Social Rights to ensure a fair transition towards this goal and policies which leave no one behind, which enables EU coodination but also respects the principle of subsidiarity in social and employment policies. Furthermore, the EU social acquis including the Union of Equality Strategies21 provides standards in the areas of labour law, equality, accessibility, health and safety at work, and anti-discrimination. _________________ 21 Gender equality strategy; LGBTIQ equality strategy; Roma strategic framework; Strategy for the Rights of Persons with Disability.
Amendment 113 #
Proposal for a regulation
Recital 10
Recital 10
(10) ESG ratings play an important role in global capital markets, as investors, borrowers and issuers increasingly use those ESG ratings as part of making informed, sustainable investment and financing decisions. Credit institutions, investment firms, insurance undertakings, assurance undertakings, and reinsurance undertakings, amongst others, often use those ESG ratings as a reference for the sustainability performance or for the sustainability risks and opportunities in their investment activity. Consequently, ESG ratings have a significant impact on the operation of the markets and on the trust and confidence of investors and consumers. To ensure that ESG ratings used in the Union are independent, objective and of adequate quality, it is important that ESG rating activities are conducted in accordance with the principles of integrity, transparency, responsibility, and good governance. Better comparability and increased reliability of ESG ratings would enhance the efficiency of that fast-growing market, thereby facilitating progress towards the objectives of the Green Deal.
Amendment 115 #
Proposal for a regulation
Recital 12
Recital 12
(12) It is necessary to acknowledge the various business models of the ESG rating market. A first business model is the user- paid model, where users are mainly investors that purchase ESG ratings for investment decisions. A second business model is the issuer-pay model, where undertakings purchase ESG ratings for assessing risks and opportunities with their operations. The different business models lead to different types of conflicts of interests which need to be managed accordingly.
Amendment 125 #
Proposal for a regulation
Recital 16 a (new)
Recital 16 a (new)
(16 a) ESG and ethical considerations are not a novel concept for businesses; they have held significant importance even before formal bureaucratic requirements. Every company aspiring to achieve long-term success has long recognised that it is no longer sufficient to solely focus on shareholder value but equally crucial to consider stakeholder value. Deception or unethical treatment of customers will inevitably jeopardize the sustainable success of a company over time. Inadequate treatment of employees within a company negatively affects their performance and may lead to employee turnover. Furthermore, any violation of legal regulations exposes the company to substantial legal and financial risks, including potential liability claims and the jeopardy of the company's existence. Misleading shareholders ultimately leads to regulatory sanctions in the stock market.
Amendment 130 #
Proposal for a regulation
Recital 20
Recital 20
(20) To ensure the quality and reliability of ESG ratings, ESG rating providers should use rating methodologies that are rigorous, systematic, objective, and continuous and subject to validation. ESG rating providers should review ESG ratings methodologies on an on-going basis and at least annually, and should regularly evaluate their methodologies against the outputs which they have been used to produce.
Amendment 137 #
Proposal for a regulation
Recital 21
Recital 21
(21) To ensure a higher-level transparency, ESG rating providers should disclose information to the public on the methodologies, models and key rating assumptions which those providers use in their ESG rating activities and in each of their ESG ratings product. In light of the uses of ESG ratings by investors, the rating products should explicitly disclose which dimension of the double materiality the rating addresses, whether it is both material financial risk to the rated entity and the material impact of the rated entity on the environment and society in general or whether it takes into account only one of them. They should also explicitly disclose whether the rating addresses other dimensions. For the same reason, ESG rating providers should provide more detailed information on the methodologies, models and key rating assumptions to subscribers of ESG ratings. That information should enable users of ESG ratings to perform their own due diligence when assessing whether to rely or not on those ESG ratings. Disclosure of information concerning models should however not reveal sensitive business information or impede innovation, proprietary knowledge or impede innovation. Striking this balance is essential for the functioning and progress of industries in the modern economy.
Amendment 147 #
Proposal for a regulation
Article 1 – paragraph 1
Article 1 – paragraph 1
This Regulation introduces a common regulatory approach to enhance the integrity, transparency, responsibility, good governance, and independence of ESG rating activities, contributing to the consistency, transparency and quacomparability of ESG ratings. It aims to contribute to the smooth functioning of the internal market, while achieving a high level of consumer and investor protection and preventing greenwashing or other types of misinformation, including social- washing, by introducing transparency requirements related to ESG ratings and rules on the organisation and conduct of ESG rating providers.
Amendment 165 #
Proposal for a regulation
Article 2 – paragraph 2 – point d
Article 2 – paragraph 2 – point d
(d) credit ratings issued pursuant to Regulation (EC) No 1060/2009 of the European Parliament and of the Council30 and any assessments of ESG factors that are created in relation to the analysis of, or as an output of, credit ratings; _________________ 30 Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (OJ L 302, 17.11.2009, p. 1).
Amendment 173 #
Proposal for a regulation
Article 2 – paragraph 2 – point f
Article 2 – paragraph 2 – point f
(f) second-party opinions on sustainability bondall types of green, social, sustainability and sustainability-linked bonds and loans;
Amendment 188 #
Proposal for a regulation
Article 2 – paragraph 2 – point i – point d a (new)
Article 2 – paragraph 2 – point i – point d a (new)
(d a) the transparency of methodology requirements pursuant to Article 13 of Regulation 2016/1011;
Amendment 191 #
Proposal for a regulation
Article 2 – paragraph 2 – point i a (new)
Article 2 – paragraph 2 – point i a (new)
(i a) the mandatory disclosures pursuant to Articles 6, 8 and 9 of Regulation (EU) 2019/2088;
Amendment 192 #
Proposal for a regulation
Article 2 – paragraph 2 – point i b (new)
Article 2 – paragraph 2 – point i b (new)
(i b) the disclosures pursuant to Articles 5, 6 and 8 of Regulation (EU) 2020/852;
Amendment 193 #
Proposal for a regulation
Article 2 – paragraph 2 – point i c (new)
Article 2 – paragraph 2 – point i c (new)
(i c) the transparency of methodology requirements to Article 13 and Annex III of Regulation 2019/2089;
Amendment 194 #
Proposal for a regulation
Article 2 – paragraph 2 – point i d (new)
Article 2 – paragraph 2 – point i d (new)
(i d) the transparency of methodology requirements to Article 13 of Regulation 2019/2175;
Amendment 195 #
Proposal for a regulation
Article 2 – paragraph 2 – point i e (new)
Article 2 – paragraph 2 – point i e (new)
(ie) the transparency of methodology requirements to Article 13 of Regulation 2021/168.
Amendment 203 #
Proposal for a regulation
Article 3 – paragraph 1 – point 2
Article 3 – paragraph 1 – point 2
(2) ‘opinion’ means an assessment that based on a rules-based methodology and defined ranking system of rating categories, involving directly a rating analyst in the rating process or systems process;
Amendment 205 #
Proposal for a regulation
Article 3 – paragraph 1 – point 3
Article 3 – paragraph 1 – point 3
(3) ‘score’ means a measure derived from data, using a rule-based methodology, and based only on a pre- established statistical or algorithmic system or model, without any additional substantial analytical input from an analyst;
Amendment 209 #
Proposal for a regulation
Article 3 – paragraph 1 – point 4
Article 3 – paragraph 1 – point 4
(4) ‘ESG rating providers’ means a legal person whose occupation includes the offering and distributionissuing of ESG ratings or scores on a professional basis;
Amendment 214 #
Proposal for a regulation
Article 3 – paragraph 1 – point 7
Article 3 – paragraph 1 – point 7
(7) ‘rated entity’ means a legal person, a financial instrument, a financial product or a public authority or a body governed by public law which is explicitly or implicitly rated in the ESG rating or score, irrespective of whether such rating has been requested for and irrespective of whether the legal person has provided information for that ESG rating or score;
Amendment 215 #
Proposal for a regulation
Article 3 – paragraph 1 – point 8
Article 3 – paragraph 1 – point 8
(8) ‘user’ means a natural or legal person, including a public authority or a body governed by public law, to which an ESG rating is provided, on the basis of a contract with an ESG rating provider;
Amendment 217 #
Proposal for a regulation
Article 3 – paragraph 1 – point 10
Article 3 – paragraph 1 – point 10
Amendment 258 #
Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 1 – introductory part
Article 10 – paragraph 1 – subparagraph 1 – introductory part
An ESG rating provider located in the Union and authorised in accordance with Article 7, or any other regulated financial undertaking in the Union with a clear and well-defined role within the control or accountability framework of a third country ESG rating provider, may endorse ESG ratings provided by a third country ESG rating provider belonging to the same group, provided that all of the following conditions have been met:
Amendment 259 #
Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 1 – point a
Article 10 – paragraph 1 – subparagraph 1 – point a
(a) the endorsing ESG rating provider located in the Union has appliedor other regulated financial undertaking in the Union has submitted a request to ESMA for authorisation of such endorsement;
Amendment 260 #
(b) the endorsing ESG rating provider locatedor other regulated financial undertaking in the Union has verified and is able to demonstrate on an on- going basis to ESMA that the provision of the ESG rating to be endorsed fulfils requirements which are at least as stringent as the requirements of this Regulation;
Amendment 261 #
Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 1 – point c
Article 10 – paragraph 1 – subparagraph 1 – point c
(c) the endorsing ESG rating provider locatedor other regulated financial undertaking in the Union has the necessary expertise to monitor the provision of ESG ratings by the third country ESG rating provider effectively, and to manage any associated risks;
Amendment 262 #
Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 1 – point e
Article 10 – paragraph 1 – subparagraph 1 – point e
(e) the endorsing ESG rating provider located in the Union provides ESMA at or other regulated financial undertaking in the Union that submits a request with all the information necessary to enable ESMA to supervise the compliance by the third country ESG rating provider with this Regulation on an ongoing basisfor endorsement shall provide all information necessary to satisfy ESMA that, at the time of application, all the conditions referred to in this paragraph 1 are fulfilled;
Amendment 272 #
Proposal for a regulation
Article 10 – paragraph 3
Article 10 – paragraph 3
3. Within 90 working days of receipt ofESMA shall examine the application for endorsement referred to in paragraph 1, ESMA shall examine the application and decide and decide within 90 days of receipt either to authorispprove the endorsement or to refuse it. ESMA shall publicly notify the decision to endorse provided by a third country ESG rating providersh its decision.
Amendment 273 #
Proposal for a regulation
Article 10 – paragraph 4
Article 10 – paragraph 4
4. An endorsed ESG rating shall be considered to be an ESG rating provided by the endorsing ESG rating provider. The endorsing provider or other regulated financial undertaking in the Union. The endorsing ESG rating provider or other regulated financial undertaking in the Union shall not use the endorsement to avoid or circumvent the requirements of this Regulation.
Amendment 274 #
Proposal for a regulation
Article 10 – paragraph 5
Article 10 – paragraph 5
5. An ESG rating provider or other regulated financial undertaking in the Union that has endorsed an ESG rating provided by a third country ESG rating provider shall remain fully responsible for such an ESG rating and for compliance with the obligations under this Regulation.
Amendment 276 #
Proposal for a regulation
Article 10 – paragraph 6
Article 10 – paragraph 6
6. Where ESMA has well-founded reasons to consider that the conditions laid down in paragraph 1 are no longer fulfilled, it shall have the power to require the endorsing ESG rating provider or other regulated financial undertaking in the Union to cease the endorsement.
Amendment 290 #
Proposal for a regulation
Article 14 – paragraph 4
Article 14 – paragraph 4
4. ESG rating providers shall adopt and implement written policies and procedures that ensure that their ESG ratings are based on a thorough analysis of all relevant information available to themunder the methodology and that can be reasonably expected to be available to them in accordance with their business model.
Amendment 291 #
Proposal for a regulation
Article 14 – paragraph 5
Article 14 – paragraph 5
5. ESG rating providers shall adopt and implement internal due diligence policies and procedures that ensure that their business interests do not impair the independence or accuracy of the assessment activities.
Amendment 292 #
Proposal for a regulation
Article 14 – paragraph 7
Article 14 – paragraph 7
7. ESG rating providers shall use rating methodologies for the ESG ratings they provide that are rigorous, systematic, and objective and capable of validation and shall apply those rating methodologies continuously. Rating methodologies should be subject to a regular evaluation against the outputs which they have been used to produce.
Amendment 298 #
Proposal for a regulation
Article 14 – paragraph 8
Article 14 – paragraph 8
8. ESG rating providers shall review the rating methodologies referred to in paragraph 67 on an on-going basis and at least annually.
Amendment 301 #
Proposal for a regulation
Article 14 – paragraph 11
Article 14 – paragraph 11
11. ESG rating providers shall adopt, implement, and enforce measures to ensure that their ESG ratings are based on a thorough analysis of all the information that is available to them and that is relevant to their analysis in accordance with their rating methodologies. They shall adopt all necessary measures to ensure that the information they use in assigning ESG ratings is of sufficient quality and from reliable sources. ESG rating providers shall explicitly mention that their ESG ratings are their own opinion .
Amendment 304 #
Proposal for a regulation
Article 14 – paragraph 12
Article 14 – paragraph 12
12. ESG rating providers shall not be required to disclose information about their intellectual capital, intellectual property, know-how or the results of innovation that would qualify as trade secrets as defined in Article 2, point (1), of Directive (EU) 2016/943 of the European Parliament and of the Council52 . _________________ 52 Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ L 157, 15.6.2016, p. 1).
Amendment 305 #
Proposal for a regulation
Article 14 – paragraph 13
Article 14 – paragraph 13
13. ESG rating providers shall only make changes to their ESG ratings in accordance with their rating methodologies published pursuant to Article 21, unless unexpected and unforeseen events require a deviation from the established methodology in exceptional circumstances. In this case, the ESG rating provider shall make a public announcement and disclose the rationale for the deviation and the nature of the exceptional circumstance.
Amendment 311 #
Proposal for a regulation
Article 15 – paragraph 1 – introductory part
Article 15 – paragraph 1 – introductory part
1. ESG rating providers shall not provide any of the following activities:
Amendment 313 #
(a) consulting activities to investors or undertakings;
Amendment 316 #
Proposal for a regulation
Article 15 – paragraph 1 – point b
Article 15 – paragraph 1 – point b
Amendment 320 #
Proposal for a regulation
Article 15 – paragraph 1 – point c
Article 15 – paragraph 1 – point c
Amendment 322 #
Proposal for a regulation
Article 15 – paragraph 1 – point d
Article 15 – paragraph 1 – point d
Amendment 324 #
Proposal for a regulation
Article 15 – paragraph 1 – point e
Article 15 – paragraph 1 – point e
Amendment 327 #
Proposal for a regulation
Article 15 – paragraph 1 – point f
Article 15 – paragraph 1 – point f
Amendment 330 #
Proposal for a regulation
Article 15 – paragraph 2
Article 15 – paragraph 2
2. ESG rating providers shall ensure that the provision of other services than those referred to in paragraph 1 does not create risks of conflicts of interestother than ESG ratings does not create unmanageable risks within its ESG rating activities.
Amendment 333 #
Proposal for a regulation
Article 16 – title
Article 16 – title
Rating analysts, employees and other persons directly involved in the provision of ESG ratings
Amendment 334 #
Proposal for a regulation
Article 16 – paragraph 1
Article 16 – paragraph 1
1. ESG rating providers shall ensure that rating analysts, employees and any other natural person whose services are placed at its disposal or under its control and who are directly involved in the provision of ESG ratings, including analysts directly involved in the rating process and persons involved in the provision of scores, have the knowledge and experience that is necessary for the performance of the duties and tasks assigned.
Amendment 350 #
Proposal for a regulation
Article 18 – paragraph 1
Article 18 – paragraph 1
1. ESG rating providers shall have in place and publish on their website procedures for receiving, investigating and retaining records concerning complaints made by rated entities.
Amendment 357 #
Proposal for a regulation
Article 18 – paragraph 2 – point c
Article 18 – paragraph 2 – point c
Amendment 375 #
Proposal for a regulation
Article 21 – paragraph 1
Article 21 – paragraph 1
1. ESG rating providers shall disclose on their website the methodologies, models and key rating assumptions they use in their ESG rating activities, including the information referred to in point 1 of Annex III.
Amendment 393 #
Proposal for a regulation
Article 23 – paragraph 1
Article 23 – paragraph 1
1. ESG rating providers shall have in place robust governance arrangements, including a clear organisational structure with well-defined, transparent, and consistent roles and responsibilities for all persons directly involved in the provision of an ESG rating.
Amendment 395 #
Proposal for a regulation
Article 23 – paragraph 3 – subparagraph 1
Article 23 – paragraph 3 – subparagraph 1
Amendment 403 #
Proposal for a regulation
Article 24 – paragraph 2
Article 24 – paragraph 2
2. ESG rating providers shall establish specific internal control procedures to ensure the integrity and reliability of the employee or person determiningof the ESG rating, including internal sign-off by management before the dissemination of the ESG rating.
Amendment 406 #
Proposal for a regulation
Article 25 – title
Article 25 – title
Amendment 408 #
Proposal for a regulation
Article 25 – paragraph 1
Article 25 – paragraph 1
1. ESG rating providers shall take steps that are adequate to ensure that fees charged to clients are fair, reasonable, transparent, and non- discriminatory and are based on costs.
Amendment 412 #
Proposal for a regulation
Article 25 – paragraph 2
Article 25 – paragraph 2
2. For the purposes of paragraph 1, ESMA may require ESG rating providers to provide it with documented evidence, may take supervisory measures in accordance with Article 33, and may decide to impose fines in accordance with Article 34 where it finds that fees from ESG rating providers are not fair, reasonable, transparent, and non- discriminatory and not based on actual costs.
Amendment 415 #
Proposal for a regulation
Article 26 – title
Article 26 – title
Non-interference with the data sources or the content of ratings or methodologies
Amendment 417 #
Proposal for a regulation
Article 26 – paragraph 1
Article 26 – paragraph 1
In carrying out their duties under this Regulation, ESMA, the Commission or any public authorities of a Member State shall not interfere with the content of ESG ratings or methodologies. Rated entities and subscribers shall not interfere with the content of ESG ratings or methodologies.
Amendment 440 #
Proposal for a regulation
Article 34 – paragraph 2
Article 34 – paragraph 2
2. Where the ESG ratings provider is a parent undertaking or a subsidiary of a parent undertaking which is required to prepare consolidated financial accounts pursuant to Directive 2013/34/EU, the relevant total annual net turnover shall be either the total annual net turnover, or the corresponding type of income in accordance with the relevant Union law in the area of accounting, according to the most recent available consolidated accounts of the ESG rating provider approved by the relevant management body of the ultimate parent undertaking.
Amendment 442 #
Proposal for a regulation
Article 37 – paragraph 3
Article 37 – paragraph 3
3. The investigation officer shall have the power to request information in accordance with Article 30 and to conduct investigations and on-site inspections in accordance with Articles 31 and 32. When using those powers, the investigating officer shall comply with Article 29.
Amendment 443 #
Proposal for a regulation
Article 37 – paragraph 4 a (new)
Article 37 – paragraph 4 a (new)
4a. Upon completion of his investigation and before submitting the file with his findings to ESMA's Board of Supervisors, the investigating officer shall give the persons subject to investigation the opportunity to be heard on the matters being investigated. The investigating officer shall base his findings only on facts on which the persons subject to investigation have had the opportunity to comment.
Amendment 444 #
Proposal for a regulation
Article 37 – paragraph 6
Article 37 – paragraph 6
6. Upon submission of the file with his or her findings to ESMA’s Board of Supervisors, the investigation officer shall notify the persons who are subject to the investigation. The persons subject to investigation shall be entitled to have access to the file, subject to the legitimate interest of other persons in the protection of their business secrets. The right of access to the file shall not extend to confidential information affecting third parties.
Amendment 445 #
Proposal for a regulation
Article 37 – paragraph 7
Article 37 – paragraph 7
7. On the basis of the file containing the investigation officer’s findings and, where requested by the persons concerned after having heard those persons in accordance with Article 38, the Board of Supervisors of ESMA shall assessdecide whether one or more persons subject to the investigation have committed the infringements concerned and shall, where it comes to the conclusion that such infringements have been committed, take a supervisory measure as referred to in Article 33 and impose a fine in accordance with Article 34.
Amendment 457 #
Proposal for a regulation
Article 48 – paragraph 1
Article 48 – paragraph 1
1. ESG rating providers which provided their services at the date of entry into force of this Regulation shall notify ESMA within 3 months if they want to continue offering their services and apply for authorisation in accordance with Article 5. In that case, they shall apply for authorisation within 612 months after the publication date of application of this Regulatthe delegated acts referred to in Article 5 (3), Article 11 (8), Article 21 (3), Article 22 (3) Article 27 (2), 40 (2), in the Official Journal of the European Union.
Amendment 468 #
Proposal for a regulation
Article 50 – paragraph 2
Article 50 – paragraph 2
It shall apply from [618 months after the entry into force of this Regulation].
Amendment 476 #
Proposal for a regulation
Annex II – Part 1 – paragraph 1 – point b
Annex II – Part 1 – paragraph 1 – point b
(b) for each ESG rating in the form of a score, the identity of the persons responsible for the development of the rule-basestablished methodology, and the identity of the persons who have approved the rating methodology;
Amendment 481 #
Proposal for a regulation
Annex III – Part 1 – paragraph 1 – point b
Annex III – Part 1 – paragraph 1 – point b
Amendment 496 #
Proposal for a regulation
Annex III – Part 1 – paragraph 1 – point j
Annex III – Part 1 – paragraph 1 – point j