Insurance Europe lays out improvements around EC’s ESG rating proposals

Written by Adam Cadle

04/09/2023

Insurance Europe has welcomed the EC’s proposal to improve the availability, integrity and transparency of ESG rating activities, whilst also laying out seven areas of improvement.

“The planned introduction of regulatory standards for rating activities should improve the quality of information on ESG ratings and address existing shortcomings in the ESG rating market,” it argued. However, it added that “ESG data is equally important to support sustainable investment strategies and manage risk”.

Insurance Europe said there is a need for common standards and binding requirements to ensure the quality of ESG data products, ensure reliability and comparability. It also argued that the entire group of ESG rating providers must be included in the regulation, a this will “help avoid possibilities for circumvention in the involvement of third parties, in particular in the dissemination of ESG ratings and ESG data via licensing agreements with unregulated group companies”.

Furthermore, Insurance Europe said the EC must ensure non-discriminatory access to ESG ratings, including for private investors, and there must be a clear definition of ‘financial products’.

Lastly, it said the implementation deadlines and transitional periods should be chosen so that it is possible for EU and non-EU agencies to set up the necessary, legal organisational structures, and to avoid a market concentration, the regulation should not impose price restrictions, which would lead smaller or new companies to consider that an investment in such a data and model structure would not be worthwhile.

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