EU ESG Ratings Regulation: what providers need to know ahead of the July 2026 deadline

From 2 July 2026, Regulation (EU) 2024/3005 on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities (the “Regulation”) will take effect, requiring ESG rating providers operating in the EU to be authorised by the European Securities and Markets Authority (ESMA). Providers that were already operating in the EU on 2 January 2025 must notify ESMA by 2 August 2026 if they wish to continue their activities, and must submit an application for authorisation or recognition within four months of 2 July 2026, failing which they must cease their EU activities.

What ESG ratings would fall in scope?

The Regulation applies to ESG ratings issued by ESG rating providers that are operating in the EU. 

An ESG rating is defined as an opinion, score, or combination of the two, based on an established methodology and a defined ranking system of rating categories, regarding the ESG profile, the exposure to ESG risks of, or the impact on ESG of, a legal person, financial instrument, financial product or public body.

An ESG rating provider is a legal person whose activities include the issuance, and the publication or distribution, of ESG ratings on a professional basis. Whether such a provider is considered to be "operating in the EU" depends on where it is established. For providers established outside the EU, the Regulation applies where they issue and distribute ESG ratings by subscription or other contractual relationships to, among others, regulated financial undertakings in the EU or to companies, partnerships and LLPs (or their equivalents in EU Member States). Importantly, a non-EU provider does not fall within scope simply by publishing ESG ratings on its website or through other means.

Are there any exemptions?

Yes. The Regulation contains certain exemptions, including for private ESG ratings that are not intended for public disclosure or for distribution, for the publication or distribution of raw ESG data and for ratings published or distributed by non-profit organisations for non-commercial purposes without charging a fee.

Are there routes to market for non-EU providers?

Non-EU ESG rating providers that are in scope have three alternative pathways to access the EU market.

The first is equivalence, under which the EU Commission may recognise a non-EU country's authorisation regime as being equivalent. As at the date of this article, no equivalence decisions have been made. The second is endorsement, which allows an ESMA-authorised EU ESG rating provider to formally endorse ESG ratings provided by a non-EU provider within the same corporate group. The third is recognition, which is available only to smaller non-EU entities with an annual net turnover below EUR 10 million for each of the last three consecutive years. Where the non-EU entity is part of a group, the consolidated annual net turnover of all the group's activities must also fall below this threshold.

What is the authorisation process for EU-based providers?

EU-based ESG rating providers must apply to ESMA for authorisation. The application must contain detailed information as specified in Annex I to the Regulation, covering the organisation's structure, ownership, senior management, staff and operations. ESMA has further developed these requirements through Regulatory Technical Standards, to be adopted by the EU Commission.

What are the key dates?

The Regulation entered into force on 2 January 2025 and will take effect from 2 July 2026. ESG rating providers that were operating in the EU on 2 January 2025 must notify ESMA by 2 August 2026 if they wish to continue operating. An application for authorisation or recognition must be made within four months of 2 July 2026. After notifying ESMA, a provider will be temporarily listed on a public register maintained by ESMA and permitted to continue operating until its application has been approved or denied. ESMA will charge a fee to providers that is proportionate to their annual net turnover, the details of which are still to be specified by the EU Commission.

Are there other ratings regimes to be aware of?

Yes – in the UK, from 29 June 2028, any firm wishing to provide certain types of ESG ratings in the UK will need authorisation from the Financial Conduct Authority (FCA). This follows from recent legislation, The Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025 (the “UK Order”) (which has an accompanying Explanatory Memo), that brings the provision of an ESG rating into regulation under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) and within the FCA’s regulatory perimeter. 

One difference in the UK Order compared to the EU Regulation is that ESG ratings will only fall within scope if that rating is likely to influence a decision to make certain specified investments. Where the person providing the ESG rating could not reasonably have expected it to influence a decision to make a specified investment, the legislation will not apply.

The FCA recently consulted on rules that would form its approach to ESG ratings regulation. The FCA will use the feedback received to inform the final rules, which will be published in a Policy Statement in Q4 2026. Firms will have a period of time to familiarise themselves with the rules. The FCA will open its authorisations gateway in June 2027, a year before the regime comes into effect. (See more on the UK ESG ratings regime in our recent briefing.)

Need advice?

For further information or tailored advice, please contact Kerry Stares or your usual Charles Russell Speechlys contact.