On 15 December 2020, the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM) and the French Authority for Financial Markets (Autorité des marchés financiers, the AMF) published a position paper containing a call for a European Regulation for the provision of Environmental, Social and Governance (ESG) data, ratings, and related services.
This paper aims at contributing to the current debate about the accuracy, reliability and transparency of ESG data, ratings, and related services offered by sustainability-related service providers to financial market participants. In the position paper it is noted that based on their regulatory experience and detailed analysis of this market, the AFM and AMF propose this new regulation with the aim of preventing misallocation of investments, greenwashing and ensuring investor protection. The new regulation should become part of the Commission’s renewed sustainable finance strategy to strengthen and expend the overall framework for sustainable finance. In the position paper the regulators first discuss the growing role of sustainability-related data and services in the financial system. They continue with raising a number of potential risks and challenges which are posed by these developments. Finally, the paper addresses the envisaged European regulatory framework aimed at strengthening the overall framework and support investor confidence in sustainable finance.