ESMA releases final report on draft regulatory technical standards under the EU ESG transparency regulation28 November 2025

The EU Regulation on the transparency and integrity of Environmental, Social and Governance (“ESG”) rating activities (the “Regulation”) entered into force on 3 January 2025. It aims to enhance the transparency and quality of ESG rating activities. The Regulation applies to all providers of ESG ratings, regardless of whether the provider is based in the EU, from 2 July 2026.

In order to facilitate the smooth implementation of the Regulation, the European Securities and Markets Authority (“ESMA”) was mandated to deliver draft regulatory technical standards (“RTS”) in the areas of authorisation, recognition, separation of activities and disclosures. In October 2025, ESMA published its final report on the draft RTS. This article examines the key aspects of the finalised draft RTS, which ESMA states have removed or clarified aspects “which could be considered unduly onerous or ambiguous”.

In the final report, ESMA expressly acknowledges that the changes made to the draft RTS take into account the wider initiative across the EU ESG regulatory framework to simplify and reduce the burden of regulatory compliance.

Key changes following consultation

ESMA has clarified and simplified a number of requirements, including:

• reduced information requirements: the requirement to provide information on the ownership structure of the applicant has been reduced from information on parent undertakings, subsidiaries and any other associated entities to parent undertakings and subsidiaries only. Other requirements that have been streamlined include information regarding senior management, staffing resources, expected market coverage and turnover;
• separation of business requirements: the requirements for a physical separation of staff have been retained, but other requirements such as network segmentation and the implementation of digital controls have been clarified or removed where judged to be imposing an excessive burden;
• self-declarations: one of the major changes is to the frequency of the requirement for employees and other persons directly involved in the assessment process of a rated item to submit a self-declaration that they do not provide any conflicting activities. ESMA has acknowledged the term “at regular intervals” may raise questions as to the required frequency of the submission. To ensure consistency in market practices, ESMA has amended the provision to require the submission to take place “once every 12 months”; and
• disclosures: it will no longer be necessary to provide disclosures on why identified issues are considered to pose a risk, or the steps taken to mitigate those risks. However, a disclosure specification has been added in response to calls for the need for greater transparency around the engagement procedures applied by ESG rating providers regarding rated items. The finalised draft RTS therefore request transparency on the process for engaging with rated items and issuers of rated items including how the input from that engagement is taken into account.

Other elements have not been amended:

• sequence and structure: ESMA has retained its initial proposal regarding the table setting out the sequence and structure of required disclosures (although limiting the table to elements intended for public disclosure only); and
• cost-benefit analysis: only limited revisions have been made with ESMA stating it considers the finalised draft “represents a balance between ensuring ESMA receives the information it needs and what is reasonable for applicants to provide”.