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1. ESG rating providers shall ensure that rating analysts, employees and any other natural person under their control or whose services are placed at their disposal, for example by way of a contractual arrangement, and who are directly involved in the provision of ESG ratings, including rating analysts directly involved in the rating process and persons involved in the provision of ESG scores, are appropriately trained and have the knowledge and experience necessary for the performance of the duties and tasks assigned, including, where appropriate, a sufficient understanding of any potential material financial risk to the rated item and any potential material impact of the rated item on the environment and on society in general.

2. ESG rating providers shall ensure that the persons referred to in paragraph 1 are not allowed to initiate or participate in negotiations regarding fees or payments with any rated item or issuer of a rated item, or with any person directly or indirectly linked to the rated item or the issuer of a rated item by control.

3. With the exception of holdings in diversified collective investment schemes, including managed funds, and of investments made under discretionary portfolio management:

(a) the persons referred to in paragraph 1 who are directly involved in the determination of an individual rating of a rated item shall not buy or sell any financial instrument issued, guaranteed, or otherwise supported by any entity that is rated within their area of analytical responsibility or by any entity within the group of that entity, nor engage in any transaction in such financial instruments;

(b) persons occupying a senior management position in the ESG rating provider shall not buy or sell any financial instrument issued, guaranteed or otherwise supported by any entity rated by the ESG rating provider, or by any entity within the group of that entity, nor engage in any transaction in such financial instruments.

4. The persons referred to in paragraph 1 shall not be directly involved in or otherwise influence the determination of an ESG rating of the relevant rated item where those persons:

(a) own financial instruments of the rated item, other than holdings in diversified collective investment schemes, including managed funds, and investments made under discretionary portfolio management;

(b) own financial instruments of any entity related to a rated item, the ownership of which might cause or might be generally perceived as causing a conflict of interest, other than holdings in diversified collective investment schemes, including managed funds, and investments made under discretionary portfolio management;

(c) have had in the last year an employment, business or other relationship with the entity rated by the ESG rating provider or any entity within the group of that entity that might cause or might be generally perceived as causing a conflict of interest.

5. ESG rating providers shall ensure that the persons referred to in paragraph 1 and persons occupying a senior management position in the ESG rating provider:

(a) take all reasonable measures to protect property and records in the possession of the ESG rating provider from fraud, theft or misuse, taking into account the nature, scale and complexity of the ESG rating provider’s business and the nature and range of its ESG rating activities;

(b) do not share confidential information that has been entrusted to the ESG rating provider with anyone who is not directly involved in the provision of ESG rating activities, including rating analysts and employees of any person directly or indirectly linked to the ESG rating provider by control, and any other natural person whose services are or have been placed at the disposal of, or are under the control of, any person directly or indirectly linked to the ESG rating provider by control;

(c) do not use or share confidential information for any other purpose than the provision of ESG rating activities, including for the trading of financial instruments; and (d) do not solicit or accept money, gifts or favours from anyone with whom the ESG rating provider does business.

6. Where the persons referred to in paragraph 1 consider that any other person referred to in that paragraph has engaged in conduct that they consider to be illegal, they shall immediately report that to the oversight function. The ESG rating provider shall ensure that such reporting does not have any negative consequences for the person reporting.

7. Where a rating analyst terminates his or her employment with the ESG rating provider and, within one year of that termination, joins a rated item or an issuer of a rated item the determination of an individual rating of which he or she has been directly involved in, the ESG rating provider shall review the relevant work of the rating analyst over the one-year period preceding his or her departure in order to verify whether there has been any conflict of interest.

8. The persons referred to in paragraph 1, and persons occupying a senior management position in the ESG rating provider, shall not take up a senior management position within a rated item or an issuer of a rated item the determination of an individual rating of which they have been involved in for a period of nine months after the date of such rating.