Legal & Regulatory News
European Securities and Markets Authority publishes analysis paper in relation to the implementation of its guidelines on ESG disclosures in credit rating press releases
10 February 2022On 10th February 2022, the European Securities and Markets Authority (ESMA) published a paper in relation to its study of the implementation of its guidelines on how and when credit rating agencies' (CRAs') consideration of ESG factors are disclosed in credit rating press releases (the Guidelines). The Guidelines have been applicable since March 2020.
The study by ESMA looked at the impact of the Guidelines by using natural language processing techniques, which were applied to a dataset of more than 64,000 CRA press releases published in 2020. Since the publication of the Guidelines, ESMA's analysis found that the overall level of ESG disclosures in CRA press releases has increased, but the level of disclosure still differs significantly across different CRAs and ESG factors. Furthermore, ESMA observed divergence in CRA disclosures, even for rated entities that are highly exposed to ESG factors relative to their sector peers. The outcome of the study suggests that there is still more room for improvement in terms of transparency as to how CRAs take ESG factors into account in their credit ratings.
Click here to access the ESMA paper.
Click here to access the Guidelines.