Erhvervsudvalget 2021-22
ERU Alm.del Bilag 338
Offentligt
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Commissioner Mairead McGuiness
Commissioner for Financial Services, Financial Stability and Capital
Markets Union
European Commission
MINISTER FOR INDUSTRY,
BUSINESS AND FINANCIAL
AFFAIRS
6 June 2022
Reply from the Danish government on the targeted consultation on the
functioning of the ESG ratings market in the European Union and on
the consideration of ESG factors in credit ratings
MINISTRY FOR INDUSTRY,
BUSINESS AND FINANCIAL
AFFAIRS
Dear Commissioner McGuinness
Thank you for this opportunity to respond to the consultation on ESG rat-
ings and ESG factors in credit ratings. Below you will find our key points
from our technical response and the main priorities for the Danish govern-
ment.
Moving the European economy towards sustainability is an important and
comprehensive task, and it is a key priority for the Danish government.
Europe holds the potential and the ability to be among the most ambitious
on sustainability globally, and we believe the European countries should
pursue this role. We want to emphasize that all criteria, both environmental,
social and governance, should stand on equal footing, receive full attention,
and be implemented continuously as standards are developed.
As part of the sustainable transition, ESG ratings serve as a helpful tool for
investors who seek to invest sustainably, and high quality ESG ratings can
support well-functioning markets where capital is increasingly directed to-
wards sustainable investments.
As an increasing number of investors wish to invest sustainably, the impact
of ESG ratings becomes increasingly relevant. Thus, we welcome initia-
tives on gaining further insights on the condition of the ESG ratings market.
The Commission’s study on sustainability
related-ratings, data and re-
search published in January 2021 highlighted several issues with the ESG
ratings market, in particular on transparency regarding data sourcing and
methodologies. A deeper understanding of these issues is necessary if pol-
icy makers and regulators are to properly address the risk of green washing,
capital misallocation and other risks that may stem from the ESG ratings
market in the future.
Further, we must not forget social and governance criteria. Environmental
and climate are currently standing in the foreground, but they should not
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overshadow our commitment to tackle issues in relation to social justice,
unfair working conditions and diversity in management.
In order to enhance the reliability of and confidence in ESG ratings, we
believe it is important that policymakers push the development of more
sustainability data and ensure transparency in ESG ratings. The insights
gained from this consultation are essential to ensure that any possible future
policy interventions are based on a sufficient level of knowledge, analysis
and impact assessment. Trustworthy and reliable ratings and information
about ESG are key to ensure confidence from investors and consumers and
a high level of protection, safeguarding against green washing and related
risks. This is essential to ensure a credible sustainable transition.
In this regard, coherence with other initiatives to support the EU’s work on
sustainable financing is of high importance. The Commission’s possible
requirements for ESG assessments should therefore be based on the infor-
mation that companies, both financial and non-financial, are required to
report under the CSRD, SFDR and the Taxonomy.
In case the Commission’s work on the ESG assessments and Sustainability
Risks in Credit Assessments initiative gives rise to the need for additional
information from ESG assessment providers, such information should be
communicated to the Commission and EFRAG, which should take these
observations into consideration in the ongoing updates of technical sustain-
ability standards. Likewise, the expected impact of CSRD should be taken
into account prior to any possible initiatives on the ESG assessments.
It is well-known that the challenge to address in sustainable finance is en-
suring sufficient and reliable data to underpin sustainable investing and
changing capital flows. More high-quality ESG ratings and increased focus
on ESG factors
–
all three factors
–
could help address this challenge.
We stand ready to answer any questions or engage in future discussions,
and look forward to following the coming work from the Commission.
Yours sincerely,
Simon Kollerup