Since 2 July 2026, ESG rating providers operating in the EU have been operating under a new supervisory framework. Regulation (EU) 2024/3005 places MSCI, Sustainalytics, EcoVadis and their peers under direct ESMA authorisation, governance requirements, and disclosure obligations — including mandatory transparency around methodologies, data sources, the use of estimates, and the separation of business lines that create conflicts of interest. Providers already active in the EU must notify ESMA before 2 August. Full authorisation applications follow within four months. From November 2, 2026, only authorised providers may legally offer ESG ratings in the EU.
The regulation resolves a genuine problem: for years, ESG rating providers operated without mandatory disclosure of how they constructed their ratings, making it structurally difficult for users to assess what a rating measured or how reliable it was. Under the new framework, asset managers will have access to more granular methodology disclosure and more consistent governance standards across providers.
That is a meaningful improvement.
It does not, however, transfer the due diligence responsibility. The regulation creates a more transparent market — it does not create a more comparable one. Different providers will continue to weight environmental, social and governance factors differently, apply different materiality lenses, and reach different conclusions about the same company. An ESMA-authorised MSCI score and an ESMA-authorised Sustainalytics score are not more likely to agree with each other than they were before 2 July. The asset manager's responsibility to understand which rating measures what, and to use that understanding in investment and stewardship decisions, has not been outsourced to the regulator.
Sources: ESG Ratings Regulation analysis — Sustainability Online EU ESG Rating Regulation guide — Sunhat