Changes from report parliamentary committee draft to plenary report

AddedSupervisory fees

Added1. ESMA shall charge proportionate fees to the ESG rating providers in accordance with the delegated act adopted pursuant to paragraph 2. Those fees shall have as reference the amount needed to cover ESMA’s necessary expenditure relating to the supervision of ESG rating providers and the reimbursement of any costs that the competent authorities may incur carrying out work pursuant to this Regulation, and in particular as a result of any delegation of tasks in accordance with Article 41, and shall fully cover that amount.

Added2. The amount of an individual fee shall be proportionate to the annual net turnover of the ESG ratings provider concerned.

AddedBy ... [12 months from the date of entry into force of this Regulation], the Commission shall adopt delegated acts in accordance with Article 45 to supplement this Regulation by specifying the type of fees, the matters for which fees are due, the amount of the fees and respective justification, the manner in which they are to be paid and, where applicable, the way in which ESMA is to reimburse competent authorities in respect of any costs that they may have incurred carrying out work pursuant to this Regulation, in particular as a result of any delegation of tasks as referred to in Article 41.

AddedCooperation between ESMA and national competent authorities

AddedDelegation of tasks by ESMA to competent authorities

Added1. Where necessary for the proper performance of a supervisory task, ESMA may delegate specific supervisory tasks to the competent authority of a Member State in accordance with the guidelines issued by ESMA pursuant to Article 16 of Regulation (EU) No 1095/2010. Such specific supervisory tasks may, in particular, include the power to carry out requests for information in accordance with Article 30 and to conduct investigations and on-site inspections in accordance with Article 31 and Article 32.

Added2. Prior to the delegation of a task in accordance with paragraph 1, ESMA shall consult the relevant competent authority about:

Added(a) the scope of the task to be delegated;

Added(b) the timetable for the performance of the task;

Added(c) the transmission of necessary information by and to ESMA.

Added3. ESMA shall reimburse a competent authority for costs incurred as a result of carrying out delegated tasks in accordance with the delegated act adopted pursuant to Article 45.

Added4. ESMA shall review any delegation made in accordance with paragraph 1 at appropriate intervals. ESMA may revoke a delegation at any time.

Added5. A delegation of tasks shall not affect the responsibility of ESMA nor limit ESMA’s ability to conduct and oversee the delegated activity. ESMA shall not delegate supervisory responsibilities, including authorisation decisions, final assessments and follow-up decisions concerning infringements.

AddedExchange of information

AddedESMA and the competent authorities, shall, without undue delay, provide each other with the information required for carrying out their duties under this Regulation or their respective supervisory responsibility and mandates.

AddedNotifications and suspension requests by competent authorities

Added1. A competent authority of a Member State that finds that acts infringing this Regulation are being, or have been, carried out on the territory of its own or of another Member State shall inform ESMA thereof. A competent authority that considers it appropriate for investigatory purposes may suggest to ESMA that it assesses the need to use the powers under Article 30 in relation to the ESG rating provider involved in those acts.

Added2. ESMA shall take appropriate action. ESMA shall inform the notifying competent authority of the outcome and, as far as possible, of any significant interim developments.

Added3. A notifying competent authority of a Member State that considers that an ESG rating provider that is listed in the register referred to in Article 13 and whose ESG ratings are used within the territory of that Member State has infringed this Regulation in such a way that the protection of investors or the stability of the financial system in that Member State are significantly impacted, may request ESMA to suspend the provision of ESG ratings by the ESG rating provider concerned. The notifying competent authority shall provide ESMA with full reasons for its request.

Added4. Where ESMA considers that the request referred to in paragraph 3 is not justified, it shall inform the notifying competent authority thereof in writing, setting out the reasons for its opinion. Where ESMA considers that the request is justified, it shall take the measures appropriate to resolve the issue.

AddedProfessional secrecy

Added1. The obligation of professional secrecy shall apply to ESMA, the competent authorities, and all persons who work or who have worked for ESMA, for the competent authorities or for any other person to whom ESMA has delegated tasks, including auditors and experts contracted by ESMA.

Added2. All the information exchanged under this Regulation between ESMA, the competent authorities, the EBA, EIOPA and the ESRB shall be considered confidential, except:

Added(a) where ESMA or the competent authority or another authority or body concerned states at the time of communication that such information may be disclosed;

Added(b) where disclosure is necessary for legal proceedings;

Added(c) where the information disclosed is used in a summary or in an aggregate form in which individual financial market participants cannot be identified.

AddedDELEGATED AND IMPLEMENTING ACTS

AddedExercise and revocation of the delegation and objections to delegated acts

Added1. The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article.

Added2. The power to adopt delegated acts referred to in Articles 9(3), 37(9) and 40(2) shall be conferred on the Commission for a period of five years from ... [date of entry into force of this Regulation]. The Commission shall draw up a report in respect of the delegation of power not later than nine months before the end of that period. The delegation of power shall be tacitly extended for periods of an identical duration, unless the European Parliament or the Council opposes such extension not later than three months before the end of each period.

Added3. The delegation of power referred to in Articles 9(3), 37(9) and 40(2) may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

Added4. Before adopting a delegated act, the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Inter-institutional Agreement of 13 April 2016 on Better Law-Making.

Added5. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

Added6. A delegated act adopted pursuant to Articles 9(3), 37(9) and 40(2) shall enter into force only if no objection has been expressed either by the European Parliament or by the Council within a period of three months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by [three months] at the initiative of the European Parliament or of the Council.

Added7. If, on expiry of the period referred to in paragraph 6, neither the European Parliament nor the Council has objected to the delegated act, it shall be published in the Official Journal of the European Union and shall enter into force on the date stated therein. The delegated act may be published in the Official Journal of the European Union and enter into force before the expiry of that period if the European Parliament and the Council have both informed the Commission of their intention not to raise objections.

Added8. If either the European Parliament or the Council objects to the delegated act within the period referred to in paragraph 1, it shall not enter into force. In accordance with Article 296 of the Treaty on the Functioning of the European Union, the institution which objects shall state the reasons for objecting to the delegated act.

Added▐Article 47

AddedCommittee procedure

Added1. The Commission shall be assisted by the European Securities Committee established by Commission Decision 2001/528/EC. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011 of the European Parliament and of the Council.

Added2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.

AddedTRANSITIONAL AND FINAL PROVISIONS

AddedTransitional provisions

Added1. ESG rating providers which provided their services at the date of entry into force of this Regulation shall notify ESMA within 3 months if they want to continue offering their services and apply for authorisation in accordance with Article 5. In that case, they shall apply for authorisation within 6 months after the date of application of this Regulation.

Added1a. After notifying ESMA pursuant to paragraph 1, the ESG rating provider shall be registered as temporarily authorised in the register referred to in Article 13 and be authorised to continue providing services in the Union until its application has been approved or denied.

Added2. By way of derogation of the first paragraph, ESG rating providers categorized as small and medium-sized undertaking under Article 3 of the Directive 2013/34/EU shall apply for authorisation within 24 months after the date of application of this Regulation.

Added3. ESG rating providers categorized as small and medium-sized undertaking under Article 3 of Directive 2013/34/EU entering the market after [please insert the date of entry into application] shall notify ESMA prior to starting offering their services and shall apply for authorisation within 12 months of that notification.

AddedReview

Added1. The Commission shall evaluate the application of this Regulation by [five years after the entry into force of this Regulation].

Added2. The Commission shall present a report on the main findings of the evaluation to the European Parliament and the Council. In carrying out the evaluation, the Commission shall take into account market developments and the relevant evidence at its disposal.

Added3. Where the Commission finds it appropriate, the report shall be accompanied by a legislative proposal for amendment of relevant provisions of this Regulation.

Added3a. By ... [3 years from the date of entry into force of this Regulation], the Commission shall, in close cooperation with ESMA, publish a report considering whether the scope of this Regulation is sufficient to ensure confidence in the market and to attain its objectives, including the need to extend the scope to ESG data providers. The report may be accompanied, if appropriate, by a legislative proposal.

Added3b. By ... [3 years from the date of entry into force of this Regulation], the Commission shall publish a report on the functioning of the ESG rating market, including:

Added(a) whether its general principles, including the non-interference principle referred to in Article 26, have sufficiently contributed to improving the quality and reliability of ESG ratings and reduced the use of misleading ESG ratings;

Added(b) whether the obligation under Article 16a to consider the appointment of an ESG rating provider with a lower market share has sufficed to limit concentration in the ESG rating market; and

Added(c) whether the methodologies used by ESG rating providers are consistent with the Union objectives and the international standards related to each factor, including a consideration of the need to set out in this Regulation minimum requirements regarding the content of ESG ratings and their methodologies.

AddedThe report may be accompanied, if appropriate, by a legislative proposal.

Added3c. ESMA shall submit a report to the European Parliament, the Council and the Commission by ... [three years from the date of entry into force of this Regulation] on the adequacy of the requirements of Articles 9, 10 and 11 in order for third country ESG rating providers to be able to provide ESG ratings in the Union. The Comission shall consider the results of the report and submit, where appropriate, a legislative proposal.

AddedEntry into force and application

AddedThis Regulation shall enter into force on the 20th day following that of its publication in the Official Journal of the European Union.