FIA EPTA welcomes the opportunity to respond to the European Securities and Markets Authority (ESMA) Call for Evidence On Market Characteristics for ESG Rating Providers in the EU. In 2019 FIA EPTA established a Sustainable Finance Committee for its member firms to explore how liquidity providers can contribute to the green transition. FIA EPTA members believe ESG ratings are extremely relevant for EU financial markets and financial market participants. Most financial market participants base their investment decisions based on internal reviews in combination with available data from data/rating providers. The data from these companies need to be transparent and clear about what they entail.
FIA EPTA members believe that current ESG ratings could pose a risk to orderly markets, financial stability and investor protection in the EU. FIA EPTA members would encourage the EU to continue with its regulatory objectives to get more transparency in the ESG markets as it could become a risk to markets if the growing number of ESG products have unclear ratings.