What changed between the draft committee report and the plenary report

Added:4. The authorisation shall be effective for the entire territory of the Union.

Added:Withdrawal or suspension of authorisation

Added:1. ESMA shall withdraw or suspend the authorisation of an ESG rating provider in any of the following cases:

Added:(a) the ESG rating provider has expressly renounced the authorisation or has provided no ESG ratings for 12 months preceding that withdrawal or suspension;

Added:(b) the ESG rating provider has obtained its authorisation by making false statements or by any other irregular means;

Added:(c) the ESG rating provider no longer meets the conditions under which it was authorised;

Added:(d) the ESG rating provider has seriously or repeatedly infringed this Regulation.

Added:2. The decision on the withdrawal or suspension of authorisation shall take immediate effect throughout the Union.

Added:2a. In the event of a withdrawal or suspension based on any of the cases listed in paragraph 1, points (b) to (d), ESMA shall publish the decision on the withdrawal or suspension on its website.

Added:Provision of ESG ratings in the Union by third country ESG rating providers

Added:Equivalence decision

Added:1. A third country ESG rating provider that wishes to provide ESG ratings in the Union shall only be able to do so where it is included in the register referred to in Article 13 and provided that all of the following conditions have been complied with:

Added:(a) the third country ESG rating provider is a legal person, is authorised or registered as an ESG rating provider in the third country concerned, and is subject to supervision by that third country;

Added:(b) the third country ESG rating provider has notified ESMA that it wishes to provide ESG ratings in the Union and has informed ESMA with the name of the competent authority responsible for its supervision in the third country;

Added:(c) the Commission has adopted an equivalence decision pursuant to paragraph 2;

Added:(d) the cooperation arrangements referred to in paragraph 4 are operational;

Added:(da) the establishment of the third country ESG rating provider in the Union would be disproportionate to the nature, scale and complexity of that provider’s ESG rating activities in the Union;

Added:(db) the third-country ESG rating provider has been authorised by ESMA pursuant to Article 7.

Added:2. The Commission shall, where appropriate, adopt an implementing decision stating that the legal framework and supervisory practice of a third country ensures that:

Added:(a) ESG rating providers authorised or registered in that third country comply with binding requirements which are equivalent to the requirements under this Regulation,

Added:(b) compliance with the binding requirements referred to in point (a) is subject to effective, regular and equivalent supervision and enforcement on an on-going basis in that third country.

Added:For the purposes of point (a), the Commission shall take into account whether the legal framework and supervisory practice of a third country ensures at least compliance with the IOSCO recommendations for ESG Ratings published in November 2021. Compliance with those recommendations does not in and of itself constitute equivalence.

Added:Such implementing decision shall be adopted in accordance with the examination procedure referred to in Article 47.

Added:3. The Commission may adopt a delegated act in accordance with Article 45 to specify the conditions referred to in points (a) and (b) of the first subparagraph. The Commission may subject the application of the implementing decision referred to in paragraph 2 to:

Added:(a) the effective fulfilment on an ongoing basis by that third country of any condition set out in that implementing decision that aims at ensuring equivalent supervisory and regulatory standards;

Added:(b) the ability of ESMA to effectively exercise the monitoring responsibilities referred to in Article 33 of Regulation (EU) No 1095/2010.

Added:4. ESMA shall establish cooperation arrangements with the competent authorities of third countries whose legal framework and supervisory practices have been recognised as equivalent in accordance with paragraph 2. Such arrangements shall specify all of the following:

Added:(a) the mechanism for exchanging information on a regular and ad hoc basis between ESMA and the competent authorities of third countries concerned, including access to all relevant information requested by ESMA regarding the ESG rating provider authorised or registered in that third country;

Added:(b) the mechanism for prompt notification to ESMA where a third country competent authority deems that the ESG rating provider authorised or registered in that third country and that is supervised by that third country competent authority is breaching the conditions of its authorisation or registration, or other national law in that third country;

Added:(c) the procedures concerning the coordination of supervisory activities, including on-site inspections.

Added:Endorsement of ESG ratings provided by a third country ESG rating provider

Added:1. An ESG rating provider located in the Union and authorised in accordance with Article 7 may endorse ESG ratings provided by a third country ESG rating provider belonging to the same group, provided that all of the following conditions have been met:

Added:(a) the ESG rating provider located in the Union has applied to ESMA for authorisation of such endorsement;

Added:(aa) the ESG rating provider located in the Union fulfils the indicators of minimum substance set out in Article 7(1) of [Council Directive laying down rules to prevent the misuse of shell entities for tax purposes and amending Directive 2011/16/EU];(ab) the endorsement of the ESG rating does not impair the quality of the assessment of the rated entity or the arrangement of on-site reviews or inspections, where provided for in the ESG rating methodology used by the ESG rating provider;

Added:(b) the ESG rating provider located in the Union has verified and is able to demonstrate on an on-going basis to ESMA that the provision of the ESG rating to be endorsed fulfils requirements which are at least as stringent as the requirements of this Regulation;

Added:(c) the ESG rating provider located in the Union has the necessary expertise to monitor the provision of ESG ratings by the third country ESG rating provider effectively, and to manage any associated risks;

Added:(d) there is an objective reason why the third country ESG rating provider has to provide the ESG rating and why that ESG rating has to be endorsed for their use in the Union, which could include proximity to the issuer, a particular industry, centres of excellence for sub-components of ESG factors, expertise of staff employed outside the Union, and the development of ratings through the collaboration of global teams;

Added:(e) the ESG rating provider located in the Union provides ESMA at its request with all the information necessary to enable ESMA to supervise the compliance by the third country ESG rating provider with this Regulation on an ongoing basis in accordance with Article 30;

Added:(f) where a third country ESG rating provider is subject to supervision, an appropriate cooperation arrangement is in place between ESMA and the competent authority of the third country where the ESG rating provider is located, to ensure an efficient exchange of information;

Added:(fa) the endorsement of ESG ratings does not represent the main activity of the ESG rating provider.

Added:For the purposes of point (b) of the first subparagraph, ESMA shall examine compliance with the requirements of this Regulation, particularly those of Article 5 and Articles 14 to 25. ESMA shall consider the application of the IOSCO recommendations for ESG ratings. Compliance with those recommendations does not in and of itself satisfy the condition set out in point (b) of the first subparagraph .

Added:2. An ESG rating provider that applies for endorsement as referred to in paragraph 1 shall provide ESMA with all information necessary to satisfy ESMA that, at the time of application, all the conditions referred to in that paragraph are fulfilled.

Added:3. Within 30 working days of receipt of the application for endorsement referred to in paragraph 1, ESMA shall assess whether the application is complete. Where the application is not complete, ESMA shall notify the ESG rating provider that applied for endorsement and shall set a deadline by which that ESG rating provider is to provide additional information. Where the application is complete, ESMA shall notify the ESG rating provider thereof.

Added:Within 45 working days of receipt of a complete application for endorsement, ESMA shall verify that the requirements laid down in paragraphs 1 and 2 are fufilled.

Added:ESMA shall publicly notify the decision to endorse provided by a third country ESG rating provider.

Added:4. An endorsed ESG rating shall be considered to be an ESG rating provided by the endorsing ESG rating provider. The endorsing provider shall not use the endorsement to avoid or circumvent the requirements of this Regulation.

Added:5. An ESG rating provider that has endorsed an ESG rating provided by a third country ESG rating provider shall remain fully responsible for such an ESG rating and for compliance with the obligations under this Regulation.

Added:6. Where ESMA has well-founded reasons to consider that the conditions laid down in this Article are no longer fulfilled, it shall have the power to require the endorsing ESG rating provider to cease the endorsement.

Added:The first subpararaph of this paragraph is without prejudice to any penalties that could be imposed on the authorised ESG rating provider pursuant to Articles 33 to 35.

Added:Recognition of third country ESG rating providers

Added:1. Until the Commission has adopted an equivalence decision as referred to in Article 9 or, where adopted, in the event that the equivalence decision is repealed, third country ESG rating providers ▐may provide ESG ratings to regulated financial undertakings in the Union, provided that ESMA has recognised that third country ESG rating provider in accordance with this Article.

Added:1a. A third country ESG rating provider recognised by ESMA as referred to in paragraph 1 shall demonstrate that establishing a legal presence within the Union would be disproportionate to the nature, size and complexity of the third country ESG rating provider. ESMA shall take into account whether the third country ESG rating provider belongs to a group.

Added:2. Third country ESG rating providers that wish to be recognised as referred to in paragraph 1 shall comply with the requirements established in this Regulation and apply for recognition to ESMA. ▐

Added:When ESMA assesses whether third-country ESG providers comply with the requirements of this Regulation, it shall consider the application of the IOSCO recommendations for ESG ratings. Compliance with those recommendations does not in and of itself constitute recognition.

Added:For the purposes of the first subparagraph, ESMA may take into account either an assessment by an independent external auditor or a certification of the competent authority of the third country where the third country ESG rating provider is located.

Added:2a. Third-country ESG rating providers that wish to be recognised as referred to in paragraph 1 shall provide ESMA with all information listed in Annex I.

Added:3. Third country ESG rating providers that wish to be recognised as referred to in paragraph 1 shall have a legal representative. That legal representative shall be a legal person located in the Union and expressly appointed by that third country ESG rating provider to act on behalf of that ESG rating provider with regard to that ESG rating provider’s obligations under this Regulation and, in that respect, be accountable to ESMA.

Added:4. The third country ESG rating provider shall provide ESMA, prior to the recognition referred to in paragraph 1, with the following information:

Added:(a) all information necessary to satisfy ESMA that that third country ESG rating provider has established all the necessary arrangements to meet the requirements referred to in paragraph 2;

Added:(b) the list of its actual or prospective ESG ratings which are intended for provision in the Union;