Highlights and insights:
“In total we received 154 responses to the Call for Evidence split over the three categories of respondent.
Based on careful consideration our principal finding is that the number of ESG rating providers currently active in the EU is 59. This figure is derived from a combination of information provided by ESG rating providers, users and entities covered by ESG rating providers. Based on a cross comparison with the responses to the IOSCO consultation, and other publications, we now consider this number to be a reliable indicator for the size of the market in the EU.
The analysis of the responses to our call for evidence indicates a number of key characteristics and trends:
First, the structure of the market among providers is split between a small number of very large non-EU entities on one hand, and a large number of significantly smaller EU entities on the other. The EU entities providing ESG ratings can largely be characterised as small or medium sized enterprises. While the legal entities of respondents were spread out across almost half of the EU Member States, a large number of these were clustered in only three Member States.
The predominant business model is investor-pays, however, provision of ESG ratings on an issuer-pays basis is more prevalent than anticipated and was indicated in around a third of responses from providers.
The annual average revenue of respondents for 2020 amounted to EUR 22.7 million (EUR 23.7 million for EU-based providers). In comparison, the median was EUR 5.5 million (EUR 3.8 million euros for EU-based providers). We consider these figures indicate a relatively large number of providers with small revenues.”
Author & access:
- Author: ESMA
- Format: Letter and detailed annex
- Published: 24/06/22
- Access: Link to report