The European Parliament and the Council of the EU have made some significant changes to the European Commission’s proposal.

On 5 February 2024, the European Parliament and Council of the EU announced that they had reached a provisional political agreement on the text of the ESG Ratings Regulation (the Regulation). The agreed text was subsequently published on 14 February 2024. The Regulation was initially proposed by the Commission in June 2023, and seeks to introduce a new regulatory regime for ESG ratings providers “operating in the Union”. Refer to this Latham blog post for previous commentary on the proposal.

The Regulation is an important piece of the EU’s sustainability landscape, as it aims to strengthen the quality and reliability of ESG ratings, which are being relied upon more and more as the market for sustainability-related financial products develops.

The Regulation was subject to detailed consideration by the Parliament and the Council, and they have made some significant changes to the Commission’s initial proposal.

We outline some of the key outcomes in this Client Alert.