Environmental, social and governance ratings

Background

The European Economic and Social Committee (EESC)'s ECO section has responded to the Commission's proposal to regulate ESG ratings in the EU, aiming to enhance their integrity and promote informed sustainable investments. ESG ratings evaluate a company's sustainability and responsible business practices, as well as the impact of environmental, social, and governance factors on a company. The EESC recommends establishing quality standards to prevent greenwashing, stressing the importance of double materiality, that is the requirement for undertakings to report both on the impacts of its activities on people and the environment, and on how various sustainability matters affect the undertaking. Also, definitions need to be clarified to exclude certain non-commercial activities from the regulation's scope. The opinion is slated for adoption during the EESC's October 2023 plenary session.

Key points

In the opinion, the EESC

• believes that the proposed Regulation should assist in leading ESG rating market to maturity by fostering reliable information and raising standards through regulated competition between ratings providers;
• believes that minimum requirements on the quality of the ratings should be included in order to prevent greenwashing, "social-washing" and other types of misinformation and believes that mandatory inclusion of double materiality should be part of these minimum quality requirements for ESG ratings;
• recommends further clarifying the definitions of "ESG rating" and "ESG rating providers" by adding the element of regular commercial basis, in order to avoid civil society organisations (CSOs) producing scoreboards as a non-major and non-profit activity, as well as academic research and journalistic work, unintentionally falling under the scope of the Regulation;

…

Additional information 

- EESC section: Economic and Monetary Union and Economic and Social Cohesion (ECO)
- opinion type: Mandatory Opinion
- rapporteur: Krzysztof BALON (Diversity Europe - GR III / Poland)
- co-rapporteur: Andrea MONE (Workers - GR II/Italy)
- reference: ECO/623-EESC-2023
- referral: COM(2023) 314 final 2023/0177 COD, COM(2023) 314 final 2023/0177 COD
- date of adoption by section: 5/10/2023
- date of adoption in plenary: 25-26/10/2023

Contact