December 19, 2018

ESMA published a consultation on the disclosure requirements applicable to credit ratings. The paper consults on Credit Rating Agency (CRA) guidelines aimed to improve the quality and consistency of disclosures of environmental, social, and governance (ESG) factors when considered as part of a credit rating action. ESMA will accept responses to the consultation by March 19, 2019 and it expects to publish the final report by July 30, 2019.

The consultation paper proposes measures in the following areas:

  • Guidance to improve the quality and consistency of the information that is disclosed alongside the issuance of a credit rating in a publicly available press release
  • Guidance to improve the transparency of credit rating press releases concerning the extent to which sustainability factors have been considered as part of a credit rating
  • A cost-benefit analysis of the Guidelines in Annex I of the consultation paper

The guidance is intended to improve the quality of disclosures by CRAs in a manner that provides the users of credit ratings with greater transparency on whether Environmental, Social, or Governance factors were considered a key underlying element of a credit rating issuance. Although this is not a subject that is addressed explicitly under the CRA Regulation, ESMA recognizes that, in context of the EC Action Plan for sustainable finance, it is desirable to provide some guidance to the industry to ensure that the quality of disclosures can support investors needs in light of the greater focus that is now being placed on sustainability factors in investment decisions. The guidelines are in line with the EC Action Plan on sustainable finance.

 

Related Links

Comment Due Date: March 19, 2019

Keywords: Europe, EU, Banking, Insurance, Securities, CRA Regulation, CRA, Disclosures, ESG, Sustainable Finance, ESMA

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