Eschborn: Credit rating agencies operating in the EU will have to show how environmental, social and governance factors move their ratings, after the European Commission adopted two delegated regulations on 9 November 2026. The acts also force agencies to validate their methodologies more rigorously and to publish how they do it.
The first act amends Annex I of the Credit Rating Agencies Regulation, Regulation (EC) No 1060/2009, under reference C(2026)7817. It requires agencies to set up clear processes to validate methodologies, models and key rating assumptions. When they publish a rating or an outlook, they must disclose both the methodology and the validation process behind it.
The same act adds a new disclosure duty. Agencies must highlight the ESG factors that drive a rating or outlook and explain briefly why they matter, in line with the EU’s sustainable finance objectives. Investors have long asked for this transparency, arguing that climate and governance risks influence creditworthiness but rarely appear explicitly in rating reports.
The second act, under reference C(2026)7853, amends Commission Delegated Regulation (EU) No 447/2012. Those regulatory technical standards govern how the European Securities and Markets Authority (ESMA) assesses rating methodologies. The update sets criteria for incorporating ESG factors into creditworthiness assessments, so supervisors can test whether agencies treat sustainability risks consistently.
Timing gives credit rating agencies some breathing space. Both regulations enter into force on the twentieth day after publication in the Official Journal and apply 12 months later. The European Parliament and the Council can still object during the scrutiny period for delegated acts, although such objections are rare.
The reform completes a debate that began when the Commission asked ESMA for advice on ESG in ratings. EU lawmakers then wrote stronger disclosure requirements into the 2024 rules on ESG rating providers, but those rules cover a separate market of sustainability scores. The new acts bring traditional credit ratings closer to that standard without turning them into ESG ratings.
For credit rating agencies as a market, the change matters most at the margins. The three US-based agencies dominate EU ratings, while smaller European players such as Scope compete for share. Detailed disclosure duties raise compliance costs for everyone, yet they may also help smaller agencies show distinctive analysis to issuers and investors.
Banks, insurers and asset managers will feel the effect as users. Capital rules under the Capital Requirements Regulation and Solvency II still rely on external ratings, so better explained ratings feed directly into risk models. Clearer ESG drivers could also help investors comply with their own disclosure duties under the Sustainable Finance Disclosure Regulation.
ESMA will now prepare its supervisory approach to credit rating agencies for 2027 and beyond. Credit rating agencies should start mapping where ESG factors already sit in their methodologies, because the new acts require them to explain those links publicly within a year of entry into force.
