From credit rating to credit ESG: The EU Introduces a New Regulatory Framework to Ensure Transparency and Integrity, While the U.S. Lacks a Comparable Regulation – A Crucial Evolution for Financial Markets Prof. Federico Pernazza

The study explores the regulatory developments surrounding ESG ratings, highlighting the contrast between the European and U.S. approaches and examining their implications for industry operators.

In recent years, the surge in investments in financial products aligned with ESG (Environmental, Social, and Governance) criteria has led to the creation of specialized rating systems. The article analyzes the most recent European regulatory initiatives, including the Regulation (EU) 2024/3005 on transparency and integrity in ESG ratings, which aims to ensure that rating providers operate according to clear and transparent standards, while preventing greenwashing practices.

One of the key issues addressed concerns the need to regulate ESG rating providers, following the example already set for credit rating agencies. The new European Regulation introduces authorization requirements, organizational standards, and rules to prevent conflicts of interest, placing supervisory responsibility in the hands of ESMA (the European Securities and Markets Authority).

However, the topic remains controversial, particularly in light of the practical challenges faced by international operators—especially those based in the United States, where no comparable regulatory framework currently exists.