IRELAND Trends and Developments Contributed by: Vincent McConnon, William Foot, John Adams, Michelle Holligan, Nicole Burke and Graham Bloomfield, Matheson LLP
such ESG rating is explicitly labelled as an “ESG rating”, “ESG opinion” or “ESG score”. The list of ESG ratings that are explicitly out of scope has been expanded substantially since the originally proposed exemptions due to input from relevant stakeholders, and includes private ESG ratings as well as certain types of Sustainable Finance Disclosure Regulation (SFDR) disclosures and/ or EU Taxonomy disclosures. Any legal person that wishes to operate as an ESG ratings provider in the EU must obtain authorisation from ESMA if it is established in the EU. Once authorised, there are various gov - ernance, transparency, conflict of interest and methodology requirements that will apply, such as the obligation on the ESG ratings provider to publish on its website prescribed information pertaining to the methodologies, models and key rating assumptions used. Third-country ESG rating providers who wish to operate in the EU typically must (i) be author - ised and supervised in that third country and (ii) benefit from an equivalence opinion in respect
of that jurisdiction by ESMA. A non-EU entity will need to make a notification to ESMA and will be included on a specific ESMA register. There are also other routes to market for small non-EU ESG rating providers in the absence of an equiv - alence decision, involving the establishment of a legal representative in the EU and separately for non-EU ESG rating providers in certain reverse solicitation scenarios, or where an authorised EU ESG ratings provider endorses the ratings of a third-country ESG ratings provider in the same group. ESMA has significant powers of supervision in relation to compliance with the ESG Ratings Regulation, such as the power to carry out on- site inspections, withdraw or suspend the rel - evant provider’s authorisation, and issue public notices or impose fines. It is therefore incumbent on in-scope providers in Ireland and elsewhere to assess the potential impact of the ESG Rat - ings Regulation, including whether their current governance, transparency and methodology processes and procedures need to be updated.
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