EU ESG Ratings Regulation
The EU ESG Ratings Regulation is the EU law, applicable since July 2, 2026, that requires providers issuing ESG ratings in the EU to be authorized and supervised by the European Securities and Markets Authority (ESMA). It regulates the rating providers, not the companies being rated, and requires them to publish their methodologies, manage conflicts of interest, and break scores out by environmental, social, and governance component.
The regulation was adopted to make ESG ratings more transparent and comparable. Before it, providers such as EcoVadis, MSCI, and Sustainalytics operated with no common rules on how methodologies were disclosed, how conflicts of interest were handled, or how a rated company could challenge a score. The regulation applies to any provider issuing ESG ratings to users in the EU, whether the provider is based in the EU or not.
Providers already operating in the EU notify ESMA of their intention to apply for authorization and appear on ESMA's public register of notifying providers while their applications are assessed. Full applications from established providers are due by November 2, 2026, with the first authorization decisions expected around May 2027.
For a rated company, nothing changes about what it has to submit. The visible effects are on the provider side: full methodology disclosure, a formal complaints process, and scores that separate the environmental, social, and governance components rather than blending them into one figure. EcoVadis notified ESMA on July 8, 2026 and has stated that its methodology and products do not change as a result.
The regulation is separate from disclosure law. CSRD tells companies what to report; the ESG Ratings Regulation governs the firms that score them on it.
Frequently asked questions
What is the EU ESG Ratings Regulation? +
Does the ESG Ratings Regulation apply to rated companies? +
No. It regulates the rating providers, not the companies they rate. A company responding to an EcoVadis or similar request has no new obligation under it, though it should see clearer methodology documentation and a formal route to challenge a score.
Is EcoVadis authorized under the ESG Ratings Regulation? +
Not yet. EcoVadis notified ESMA of its intention to apply on July 8, 2026 and appears on ESMA's register of notifying providers. Full applications are due by November 2, 2026, with an authorization decision expected around May 2027.
Related terms
EcoVadis
EcoVadis is a private sustainability ratings provider, founded in Paris in 2007, that scores companies from 0 to 100 on how well they manage sustainability across four themes: environment, labor and human rights, ethics, and sustainable procurement. Companies are assessed because a customer asked them to be, the rated company pays for its own subscription, and only questionnaire answers backed by dated, formal documents earn points. Scorecards are valid for 12 months and medals are awarded on percentile rank against all companies rated in the prior 12 months.
ESG (Environmental, Social, Governance)
ESG stands for environmental, social, and governance: the three categories used to assess how a company manages risks and impacts outside its financial statements. Investors, customers, and regulators use ESG data to compare companies on emissions, labor practices, board oversight, and similar factors.
ESG Reporting
ESG reporting is the disclosure of an organization's performance across environmental (E), social (S), and governance (G) dimensions. It encompasses GHG emissions, water and waste management, labor practices, diversity, board structure, ethics, and risk management — providing stakeholders with a holistic view of sustainability performance.
CSRD (Corporate Sustainability Reporting Directive)
The Corporate Sustainability Reporting Directive (CSRD) is the European Union's mandatory sustainability reporting law. It requires companies operating in the EU above certain thresholds to disclose environmental, social, and governance (ESG) information according to the European Sustainability Reporting Standards (ESRS), with third-party assurance.