ESG Ratings Face New Era of Rules as EU Set to Tighten Screws

Companies providing ESG ratings will soon have to explain their methodologies and get regulatory authorization to continue, under a draft European Commission proposal seen by Bloomberg.

The European Commission’s plan is intended to rein in the booming market for environmental, social and governance scores, according to the draft document, which may still change.

The proposals are part of a larger package of measures that the commission is considering amid frustration from banks, asset managers and non-financial industries with the wide array of rules that the EU has pushed through in recent years as part of its Green Deal.

“With the ...