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1. ESG rating providers shall have in place robust governance arrangements, including a clear organisational structure with well-defined, transparent and consistent roles and responsibilities for all persons involved in the provision of an ESG rating.

2. ESG rating providers shall take all necessary steps to ensure that any ESG rating provided is not affected by any existing or potential conflict of interest, or by any business or other relationship, arising either from the ESG rating providers themselves or from their shareholders, managers, rating analysts, employees or any other natural persons whose services are placed at the disposal or under the control of the ESG rating providers, or any persons directly or indirectly linked to them by control or any third-party providers to whom functions or any services or activities have been outsourced.

3. Where there is a risk of a conflict of interest within an ESG rating provider due to the ownership structure, controlling interests or activities of that ESG rating provider, of any entity owning or controlling the ESG rating provider, of an entity that is owned or controlled by the ESG rating provider, or of any of the ESG rating provider’s affiliates or third-party providers, ESMA shall take appropriate action. ESMA may require the ESG rating provider to take measures to mitigate that risk. Where a conflict of interest as referred to in the first subparagraph is not adequately managed through the risk mitigation measures referred to in the first subparagraph, ESMA shall require the ESG rating provider to resolve that conflict of interest. If necessary, ESMA may require the ESG rating provider to cease the activities or relationships that create the conflict of interest, or to cease providing the ESG ratings.

4. A shareholder or a member of an ESG rating provider exercising significant influence within the meaning of Article 2, point (13), second sentence, of Directive 2013/34/EU over that ESG rating provider, or over an undertaking which has the power to exercise control or a dominant influence over that ESG rating provider, shall be prohibited from doing any of the following:

(a) exercising significant influence over any other ESG rating provider;

(b) having the right or the power to appoint or remove members of the administrative or supervisory board of any other ESG rating provider;

(c) being a member of the administrative or supervisory board of any other ESG rating provider. The first subparagraph of this paragraph shall not apply to investments in other ESG rating providers belonging to the same group of ESG rating providers or to investments in ESG rating providers that are micro-undertakings or small undertakings according to the criteria laid down in Article 3(1) and Article 3(2), first subparagraph, respectively, of Directive 2013/34/EU.

5. ESG rating providers shall disclose to ESMA all existing or potential conflicts of interest, including conflicts of interest arising from the ownership or control of the ESG rating providers.

6. ESG rating providers shall establish and operate policies, procedures and effective organisational arrangements for the identification, disclosure, prevention, management and mitigation of conflicts of interest. ESG rating providers shall regularly review and update those policies, procedures and arrangements. Those policies, procedures and arrangements shall specifically prevent, manage and mitigate conflicts of interest due to the ESG rating provider’s ownership or control or due to other interests in the ESG rating provider’s group, or conflicts of interest that are caused by other persons that exercise influence or control over the ESG rating provider in relation to determining the ESG rating.

7. ESG rating providers shall review their operations to identify potential conflicts of interest at least annually.