Bijlagen bij COM(2023)314 - Transparantie en integriteit van op ecologische, sociale en governancefactoren gebaseerde ratingactiviteiten - Hoofdinhoud
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| dossier | COM(2023)314 - Transparantie en integriteit van op ecologische, sociale en governancefactoren gebaseerde ratingactiviteiten. |
|---|---|
| document | COM(2023)314  |
| datum | 13 juni 2023 |
3.2.4.Compatibility with the current multiannual financial framework
–☑ The proposal/initiative is compatible the current multiannual financial framework.
–◻ The proposal/initiative will entail reprogramming of the relevant heading in the multiannual financial framework.
Explain what reprogramming is required, specifying the budget lines concerned and the corresponding amounts.
N/A
–◻ The proposal/initiative requires application of the flexibility instrument or revision of the multiannual financial framework 68 .
Explain what is required, specifying the headings and budget lines concerned and the corresponding amounts.
N/A
3.2.5.Third-party contributions
–◻ The proposal/initiative does not provide for co-financing by third parties.
–☑ The proposal/initiative provides for the co-financing estimated below:
EUR million (to three decimal places)
| 2023 | 2024 | 2025 | 2026 | 2027 | Total | |
| Estimate of costs covered by supervisory fees | 1.911 | 3.833 | 3.685 | 9.430 | ||
| TOTAL appropriations co-financed (including employer’s pension contributions) | 1.911 | 3.833 | 3.685 | 9.430 |
3.3.Estimated impact on revenue
–☑ The proposal/initiative has no financial impact on revenue.
–◻ The proposal/initiative has the following financial impact:
–◻ on own resources
–◻ on other revenue
–◻ please indicate, if the revenue is assigned to expenditure lines
EUR million (to three decimal places)
| Budget revenue line: | Appropriations available for the current financial year | Impact of the proposal/initiative 69 | ||||||
| Year N | Year N+1 | Year N+2 | Year N+3 | Enter as many years as necessary to show the duration of the impact (see point 1.6) | ||||
| Article …………. |
For miscellaneous ‘assigned’ revenue, specify the budget expenditure line(s) affected.
Specify the method for calculating the impact on revenue.
Annex to the Legislative Financial Statement
General Assumptions:
·Legislation enters into force in the second half of 2024.
·Direct supervision and fees will start 6 months later, in 2025.
·The cost of additional staff expenditure (Title I) has been calculated using the average staff costs applicable from January 2023 of EUR 171 000 per Temporary Agent and EUR 91 000 per Contract Agent (i.e., the standard costs excluding the standard EUR 29 000 ‘habillage’ cost for the building and IT costs associated with additional FTEs).
The currently applicable correction coefficient for Paris (118.7) was applied to these standard costs, which were then indexed at 2% for years after 2023 (as is standard practice when programming the Union budget taking into account that in some years inflation may be less and in others it may be more).
·The cost of additional infrastructure and operating expenditure (Title II) has been calculated using the standard EUR 29 000 ‘habillage’ allocation for the building and IT costs associated with additional FTEs, indexed at 2% for years after 2023. In addition, a standard cost of EUR 2 500 per FTE (also indexed at 2% for years after 2023) has been included for other administrative costs not covered by the allocation ‘habillage’
The forecast impact on the Union budget was estimated on the following basis:
Title I – Staff Expenditure
·Calculations are based on the following data: there are 59 entities operating in the EU, out of which 30 are located in the EU, and 29 are located outside the EU. For the non-EU based entities there will be 3 ways in which they will be able to provide services in the EU: a) equivalence b) endorsement c) recognition. The intensity of supervisory tasks will vary depending on the location of providers (EU vs non-EU).
EU based entities: In the case of 30 ESG providers based in the EU (3 large + 6 medium + 9 small + 12 micro): i) in year (n), it will take 6 months for the authorisation of 30 entities based in EU (CAs)+ 6 months of supervision of those entities that have already been authorised (TAs). ii) in year (n)+1 supervision of 30 entities. iii) in year (n)+2, supervision of 30 entities.
·EU providers assumptions: COM estimates, on the basis of the input from ESMA, that it would take 1.7 FTE to supervise a large ESG rating provider and 0.2 FTE to supervise a small ESG rating provider. This is based on the assumption that ESG ratings are not as systemically important as credit ratings and will therefore require a lower level of supervisory intensity to that which ESMA currently employs for CRAs, COM has therefore applied a 50% reduction to FTE numbers for CRAs.
·Non-EU based ESG rating providers assumptions:
We considered for non-EU providers = 0.1 FTE (half of time allocated for an EU based micro ESG provider), considering 29 non-EU based ESG providers, we considered a flat fee of €3,000 per each ESG provider non-EU based (half of the amount of fees charged to certified CRAs €6,000).
·It is to be noted that the balance of staff under the ESG rating mandate (more CAs vs TAs) differs from the approach to CRAs. In both cases ESMA has a mandate of the direct supervision, however, in the case of CRAs it has considerably more TAs than CAs than TAs (37 TAs and 14 CAs) in order to ensure that skilled and experienced staff is employed on permanent basis.
·We consider it is likely there will be a peak of one-off work in the first year (year 2025) related to the authorisation. In this respect, it will be important that ESMA is given the above 19 FTEs from the start, to manage this peak. For the years 2027, it is likely the initial heavy workload of registration and authorisation will ease, and the number of temporary CAs could be reduced, so that the total number of FTEs can be reduced to 17. However, in the year 2027, ESMA will be responsible for the supervision of all entities registered and authorised in years 2025 and 2026, therefore the proposed reduction cannot be too substantial.
·Compared with number of FTEs for the direct supervision of CRAs the number of FTEs for the direct supervison of ESG rating providers has been reduced by more than 50% (total of 51 FTEs for CRAs vs 19 FTEs in 2025/2026 and 17 FTEs in 2027 for ESG rating providers). This is considered to be a minimum staff that can guarantee the proper direct supervision of the market of 59 entities.
Title III – operational expenditures
·Justification of 35.000 EUR for on-boarding of entities to supervisory reporting system. This cost is necessary to create a module in the system that ESMA uses for supervisory reporting called BWise. Given the new mandate of direct supervision, the supervisory reporting system needs to be expanded. In addition to the initial costs, there will be a recurring annual maintenance fee of 5.000 EUR.
·The reporting system enables ESMA to process supervisory documentation received from entities, and helps reduce manual labour of opening and saving e-mail attachments manually. It therefore helps to reduce FTE costs.
Estimated expenditure to be covered by fees for all direct supervisory tasks undertaken by ESMA
EUR
| ESMA | 2023 | 2024 | 2025 | 2026 | 2027 | TOTAL | ||
| Title 1: Staff expenditure | Commitments | (1) | 1.603.618 | 3.271.382 | 3.145.675 | 8.020.675 | ||
| Payments | (2) | 1.603.618 | 3.271.382 | 3.145.675 | 8.020.675 | |||
| Title 2: Infrastructure and operating expenditure | Commitments | (1a) | 273.105 | 557.134 | 534.849 | 1.365.088 | ||
| Payments | (2a) | 273.105 | 557.134 | 534.849 | 1.365.088 | |||
| Title 3: operational expenditure | Commitments | (3a) | 35.000 | 5.000 | 5.000 | 45.000 | ||
| Payments | (3b) | 35.000 | 5.000 | 5.000 | 45.000 | |||
| TOTAL appropriations | Commitments | =1+1a +3a | 1.911.724 | 3.833.516 | 3.685.523 | 9.430.763 | ||
| Payments | =2+2a +3b | 1.911.724 | 3.833.516 | 3.685.523 | 9.430.763 |
(1) Communication from the Commission on the Strategy for Financing the Transition to a Sustainable Economy COM(2021) 390 final .
(2) Communication from the Commission on the European Green Deal, COM(2019) 640 final.
(3) These building blocks are: 1) a classification system, or ‘taxonomy’, of sustainable activities, 2) a disclosure framework for non-financial and financial undertakings, and 3) investment tools, including benchmarks, standards and labels.
(4) Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting.
(5) Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088.
(6) Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector.
(7) Proposal for a Regulation of the European Parliament and of the Council on European green bonds, COM/2021/391 final.
(8) Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks.
(9) Commission Delegated Regulation (EU) 2020/1816 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards the explanation in the benchmark statement of how environmental, social and governance factors are reflected in each benchmark provided and published.
(10) See Section 2 on the Impact Assessment’s problem definition.
(11) Commission Staff Working Document SWD (2023) [XXX].
(12) ESMA risk-based and data-driven approach when conducting supervision
(13) Small group of quants develop a data-driven ESG ratings model, which has very broad firm coverage from day one.
(14) Innovative, but not revenue-producing business that takes more than seven years from founding to finalise its ESG ratings model.
(15) This will be done in close cooperation with the Platform on Sustainable Finance, which will monitor trends regarding capital flows towards sustainable investments as set out in Article 20 of the Taxonomy Regulation.
(16) OJ C , , p. .
(17) Transforming our World: The 2030 Agenda for Sustainable Development (UN 2015).
(18) COM(2016) 739 final.
(19) CO EUR 17, CONCL. 5.
(20) Communication from the Commission of 11 December 2019 on the European Green Deal, COM(2019) 640 final.
(21) Gender equality strategy; LGBTIQ equality strategy; Roma strategic framework; Strategy for the Rights of Persons with Disability.
(22) European Commission, Action Plan: Financing Sustainable Growth, COM(2018) 97 final.
(23) European Commission, Directorate-General for Financial Stability, Financial Services and Capital Markets Union, Study on sustainability-related ratings, data and research, Publications Office of the European Union, 2021, https://data.europa.eu/doi/10.2874/14850 .
(24) Communication from the Commission on the Strategy for Financing the Transition to a Sustainable Economy COM(2021) 390 final .
(25) IOSCO Report on ESG ratings and data products providers , available at: https://www.iosco.org/library/pubdocs/pdf/IOSCOPD690.pdf .
(26) Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).
(27) Regulation (EU) XX/XXXX of the European Parliament and of the Council establishing a European Single Access Point (ESAP) providing centralised access to publicly available information of relevance to financial services, capital markets and sustainability (OJ L [...], […], p. […]).
(28) Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).
(29) OJ L 123, 12.5.2016, p. 1.
(30) Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (OJ L 302, 17.11.2009, p. 1).
(31) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).
(32) Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349).
(33) Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1).
(34) Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April 2013 on European venture capital funds (OJ L 115, 25.4.2013, p. 1).
(35) Regulation (EU) No 346/2013 of the European Parliament and of the Council of 17 April 2013 on European social entrepreneurship funds (OJ L 115, 25.4.2013, p. 18).
(36) Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds (OJ L 123, 19.5.2015, p. 98).
(37) Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, p. 32).
(38) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1).
(39) Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37).
(40) Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ L 166, 30.4.2004, p. 1).
(41) Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems (OJ L 284, 30.10.2009, p. 1).
(42) Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1).
(43) Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (OJ L 257, 28.8.2014, p. 1).
(44) Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (OJ L 347, 28.12.2017, p. 35).
(45) Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35).
(46) Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (OJ L 267, 10.10.2009, p. 7).
(47) Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (OJ L 347, 20.10.2020, p. 1).
(48) COM/2020/593 final.
(49) Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).
(50) Council Regulation No 1 determining the languages to be used by the European Economic Community (OJ 17, 6.10.1958, p. 385).
(51) Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No 45/2001 and Decision No 1247/2002/EC (OJ L 295, 21.11.2018, p. 39).
(52) Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ L 157, 15.6.2016, p. 1).
(53) Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173, 12.6.2014, p. 1).
(54) Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No 45/2001 and Decision No 1247/2002/EC (OJ L 295, 21.11.2018, p. 39).
(55) Commission Decision of 6 June 2001 establishing the European Securities Committee (OJ L 191, 13.7.2001, p. 45)
(56) Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).
(57) As referred to in Article 58(2)(a) or (b) of the Financial Regulation.
(58) Relative size of the fees depending on the size of ESG rating providers. Passing costs of supervision onto supervised entities is a typical practice in the financial sector.
(59) Details of management modes and references to the Financial Regulation may be found on the BudgWeb site: https://myintracomm.ec.europa.eu/budgweb/EN/man/budgmanag/Pages/budgmanag.aspx .
(60) Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations.
(61) EFTA: European Free Trade Association.
(62) Candidate countries and, where applicable, potential candidates from the Western Balkans.
(63) Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.).
(64) All fee funded (including employer’s pension contributions)
(65) AC = Contract Staff; AL = Local Staff; END = Seconded National Expert; INT = agency staff; JPD = Junior Professionals in Delegations.
(66) Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines).
(67) Mainly for the EU Cohesion Policy Funds, the European Agricultural Fund for Rural Development (EAFRD) and the European Maritime Fisheries and Aquaculture Fund (EMFAF).
(68) See Articles 12 and 13 of Council Regulation (EU, Euratom) No 2093/2020 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 2027.
(69) As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e., gross amounts after deduction of 20 % for collection costs.
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EUROPEAN COMMISSION
Strasbourg, 13.6.2023
COM(2023) 314 final
ANNEXES
to the
Proposal for a Regulation of the European Parliament and of the Council
on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities
{SEC(2023) 241 final} - {SWD(2023) 204 final} - {SWD(2023) 207 final}
ANNEX I
Information to be provided in the application for authorisation
An application for authorisation shall contain all of the following information :
(a)the full name of the applicant, the address of the registered office within the Union, the applicant’s website and, where available, the legal entity identifier (LEI);
(b)the name and contact details of a contact person;
(c)the legal status of the applicant;
(d)the ownership structure of the applicant;
(e)the identity of the members of the senior management of the applicant and their level of qualification, experience and training;
(f)the number of the analysts, employees and other persons directly involved in assessment activities, and their level of experience and training working for the applicant and their level of experience and training;
(g)a description of the procedures and methodologies used to issue and review ESG ratings implemented by the applicant;
(h)the policies or procedures implemented by the applicant to identify, manage and disclose any conflicts of interests as referred to in Article 14 of the Regulation;
(i)where applicable, documents and information related to any existing or planned outsourcing arrangements for activities covered by this Regulation;
(j)where applicable, information about other activities carried out by the applicant, or which the applicant intends to provide.
ANNEX II
Organisational requirements
1.Record Keeping information
ESG rating providers shall keep records of all of the following:
(a)for each ESG rating in the form of an opinion, the identity of the rating analysts participating in the determination of the ESG rating, the identity of the persons who have approved the ESG rating, information as to whether the ESG rating was solicited or unsolicited, and the date on which the ESG rating action was taken;
(b)for each ESG rating in the form of a score, the identity of the persons responsible for the development of the rule-based methodology, and the identity of the persons who have approved the rating methodology;
(c)the account records relating to fees received from any rated entity or related third party or any user of ratings;
(d)the account records for each subscriber to the ESG ratings;
(e)the records documenting the established procedures and rating methodologies used by the ESG rating provider to determine ESG ratings;
(f)the internal records and external communications and files, including non-public information and work papers, used to form the basis of any ESG rating decision taken;
(g)records of the procedures and measures implemented by the ESG rating provider to comply with this Regulation;
(h)the methodology used for the determination of an ESG rating;
(i)changes in or deviations from standard procedures and methodologies;
(j)all documents relating to any complaint, including those submitted by a complainant.
2.Outsourcing
Where ESG rating providers outsource to a service provider functions or any relevant services or activities in the provision of an ESG rating, the ESG rating provider shall ensure that the following conditions are met:
(a)the service provider has the ability, capacity, and any authorisation required by law, to perform the outsourced functions, services or activities reliably and professionally;
(b)the ESG rating provider takes appropriate action if it appears that the service provider may not be carrying out the outsourced functions effectively and in compliance with applicable law and regulatory requirements;
(c)the ESG rating provider retains the necessary expertise to supervise the outsourced functions effectively and to manage the risks associated with the outsourcing;
(d)the service provider discloses to the ESG rating provider any development that may have a material impact on its ability to carry out the outsourced functions effectively and in compliance with applicable law and regulatory requirements;
(e)the ESG rating provider is able to terminate the outsourcing arrangements where necessary;
(f)the ESG rating provider takes reasonable steps, including contingency plans, to avoid undue operational risk related to the participation of the service provider in the ESG rating determination process.
ANNEX III
Disclosure requirements
1.Minimum disclosures to the public
In accordance with Article 12 of the Regulation, ESG rating providers shall, at the minimum, disclose to the public on their website and through the European Single Access Point (ESAP) the following:
(a)high level overview of the rating methodologies used (and changes thereto), including whether analysis is backward-looking or forward-looking;
(b)high level overview of data processes (data sources, including if they are public or non–public, and if they are sourced from sustainability statements required by Directive (EU) 2022/2464, estimation of input data in case of unavailability, frequency of data updates);
(c)information on whether and how the methodologies are based on scientific evidence;
(d)information on the ratings’ objective, clearly marking whether the rating is assessing risks, impacts or some other dimensions;
(e)the rating’s scope – i.e., is it an aggregated rating (aggregating E and S and G factor), or a rating of individual factors or specific issues (e.g., transition risks);
(f)in the case of an aggregated ESG rating, weighting of the three overarching ESG factors categories (e.g., 33% Environment, 33% Social, 33% Governance), and the explanation of the weighting method, including weight per individual E, S and G factors;
(g)within the E, S or G factors, specification of the topics covered by the ESG rating/score, and whether they correspond to the topics from the sustainability reporting standards developed pursuant to Article 29b of Directive 2013/34/EU;
(h)information on whether the rating is expressed in absolute or relative values,
(i)Where applicable, reference to the use of Artificial Intelligence (AI) in the data collection or rating/scoring process;
(j)general information on criteria used for establishing fees to clients, specifying the various elements taken into consideration, such as the involvement of data analysts, IT equipment, purchasing data;
(k)any limitation in data sources used for the construction of ESG ratings.
2.Additional disclosures to users of ESG rating and rated undertakings in scope of Directive 2013/34/EU
In addition to the elements referred to in Article 13 of the Regulation, ESG rating providers shall make available the following information to European regulated financial undertakings and to undertakings in the scope of Directive 2013/34/EU that are subject of such rating:
(a)a more granular overview of the rating methodologies used (and changes thereto), including:
(1)where applicable, scientific evidence and assumptions on which the ratings are based,
(2)whether the analysis is backward-looking or forward-looking,
(3)which metrics have been selected as relevant,
(4)the relevant KPIs per E, S and G factor, and weighting method,
(5)any potential shortcomings of methodologies,
(6)policies for the revision of methodologies,
(7)last date of the revision;
(b)a more granular overview of data processes, including:
(1)more detailed explanation of data sources used – including whether public or non-public, mentioning whether derived from the sustainability reporting standards developed pursuant to Article 29b of Directive 2013/34/EU /Taxonomy/SFDR],
(2)where applicable the use of estimation and industry average and explanation of the underlying methodology,
(3)the policies for updating data and revising historical data, date of last updates of data,
(4)data quality controls,
(5)any steps taken to address limitations in data sources, where applicable;
(c)where applicable, information about engagement with rated entities;
(d)where applicable, an explanation of any AI methodology used in the data collection or rating process;
(e)in case of a major new information on a rated entity that has the possibility to affect the result of an ESG rating, ESG rating providers shall inform how they have taken that information into account and whether they have amended the corresponding ESG rating.
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