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Recognition of ESG rating providers established outside the Union

1. Until such time as the Commission has adopted an equivalence decision as referred to in Article 10 or, where adopted, in the event that the equivalence decision is repealed, an ESG rating provider established outside the Union with an annual net turnover of all of its activities that is below the maximum amount set in Article 3(2), second subparagraph, of Directive 2013/34/EU, for each of the last three consecutive years may operate in the Union provided that ESMA has recognised that ESG rating provider in accordance with this Article. An ESG rating provider established outside the Union that belongs to a group as defined in Article 2, point (11), of Directive 2013/34/EU whose consolidated annual net turnover of all of the group’s activities is below the maximum amount set in Article 3(5), second subparagraph, of Directive 2013/34/EU, for each of the last three consecutive years may operate in the Union provided that ESMA has recognised that ESG rating provider in accordance with this Article. To that end, ESMA may take into account either an assessment by an independent external auditor or a certification of the competent authority of the third country where the ESG rating provider is established.

2. ESG rating providers established outside the Union that wish to be recognised as referred to in paragraph 1 shall comply with the requirements laid down in this Regulation and submit an application for recognition to ESMA.

3. An ESG rating provider established outside the Union that wishes to be recognised as referred to in paragraph 1 shall have a legal representative. That legal representative shall be a legal person established in the Union and expressly appointed by the ESG rating provider to act on its behalf. The legal representative shall demonstrate to ESMA that the ESG rating provider meets the requirements of this Regulation on an ongoing basis and shall be accountable to ESMA in that respect. The legal representative shall, upon request, provide ESMA with all information necessary to satisfy ESMA that the ESG rating provider fulfils the requirements of this Regulation.

4. An ESG rating provider established outside the Union shall, when submitting an application for recognition as referred to in paragraph 2, provide ESMA with the following:

(a) all information listed in Annex I;

(b) all information necessary to demonstrate that the conditions laid down in paragraph 1 of this Article are met;

(c) all information necessary to satisfy ESMA that the ESG rating provider established outside the Union has established the necessary arrangements to meet the requirements referred to in paragraphs 2 and 3 of this Article;

(d) the list of its actual or prospective ESG ratings which are intended for distribution in the Union;

(e) where applicable, the name and contact details of the third-country competent authority responsible for its supervision. Within 90 working days of receipt of the application for recognition referred to in paragraph 2, ESMA shall decide whether to grant recognition. ESMA shall inform the applicant of its decision within five working days of the decision.

5. ESMA shall recognise the ESG rating provider established outside the Union provided that all of the following conditions are met:

(a) the ESG rating provider established outside the Union has complied with paragraphs 2, 3 and 4;

(b) where the ESG rating provider established outside the Union is subject to supervision, ESMA shall seek to put in place an appropriate cooperation arrangement with the relevant competent authority of the third country where the ESG rating provider is established, in order to ensure an efficient exchange of information.

6. ESMA shall adopt a decision rejecting the application where ESMA is prevented from exercising effectively its supervisory functions under this Regulation by the laws, regulations or administrative provisions of the third country where the ESG rating provider is established, or, where applicable, by limitations in the supervisory and investigatory powers of that third country’s competent authority.

7. ESMA shall impose fines in accordance with Article 36, or suspend or, where appropriate, withdraw the recognition referred to in paragraph 1 of this Article, in line with Article 9, where it has well-founded reasons, based on documented evidence, to consider that the ESG rating provider:

(a) is acting, or has been acting, in a manner which is clearly prejudicial to the interests of users of ESG ratings or to the orderly functioning of markets;

(b) has seriously infringed this Regulation;

(c) has made false statements or used any other irregular means to obtain the recognition.

8. Where the ESG rating provider recognised under this Article by ESMA no longer meets the conditions laid down in paragraph 1, it shall notify ESMA thereof without undue delay. The ESG rating provider shall notify ESMA within three months of the date when it no longer meets the conditions laid down in paragraph 1 if it wishes to continue offering its services in the Union and shall apply for authorisation within 12 months of that date. In the absence of such notification, the ESG rating provider shall cease to operate in the Union.

9. ESMA shall develop draft regulatory technical standards to determine the form and content of the application for recognition referred to in paragraph 2 and, in particular, the presentation of the information required in paragraph 4. ESMA shall submit the draft regulatory technical standards referred to in the first subparagraph to the Commission by 2 October 2025. Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010.