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ESMA: ESG ratings: Status and key issues ahead

    Highlights and insights:

    “This article describes the market for ESG ratings, including types of ratings and key providers, and presents several use cases.

    In the absence of a regulatory framework, several issues and risks reduce the potential benefits of these ratings.

    The lack of a common definition and of comparability, together with transparency issues, could be ultimately detrimental to the transition towards a more sustainable financial system. To illustrate the impact of these issues on investors, our analysis focuses on the specific case of ESG benchmark construction.” (Author summary)

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