The EESC has weighed in on the EU's proposal to regulate environmental, social and governance (ESG) ratings. In an opinion adopted in October 2023, the Committee emphasises the need for quality standards to combat greenwashing and advocates the mandatory inclusion of the principle of double materiality.

The definitions of "ESG ratings" and "ESG rating providers" need to be refined to exclude certain non-commercial activities from the regulation's scope. The EESC also recommends establishing an EU sustainability agency.

ESG ratings guide investments toward sustainable practices, aiding the shift to a climate-neutral economy. Krzysztof Balon, EESC rapporteur, welcomes the Commission's proposal, emphasising "the need for rigorous standards, transparency and conflict prevention to foster trust in financial markets and achieve a climate-neutral economy".

To ensure quality and combat greenwashing, the EESC proposes an authorisation process and organisational requirements for ESG rating providers. They suggest a "double materiality" standard, mandating companies to report on sustainability's impact on their business and society/environment. "This aims to enhance information reliability through regulated competition among providers", says EESC co-rapporteur Andrea Mone.

Additionally, the EESC suggests refining "ESG ratings" and excluding non-commercial evaluations by certain groups from regulation. The Committee advocates establishing an EU sustainability agency to fill market gaps by rating SMEs, service providers and social economy enterprises. This agency would restore public confidence in financial markets and facilitate dispute resolution, a priority for the EESC. (tk)