EU ESG Ratings Regime Now Live; SFDR Overhaul in Trilogue

The EU ESG ratings regime went live on July 2, 2026, with ESMA supervising methodology transparency, governance, and conflicts of interest. Most ratings providers must apply for authorisation by November 2, 2026; ESMA's endorsement guidelines for third-country ratings providers apply from August 2, 2026. Separately, the SFDR overhaul remains in trilogue, with final text unlikely before end of 2026. The proposed framework would replace current Article 8 and Article 9 classifications with three new categories — transition products (Article 7), ESG basics (Article 8), and sustainable features (Article 9) — each requiring a 70% investment threshold aligned with a binding investment strategy. Fund managers, asset owners, and their legal advisors should begin scenario-planning for reclassification now rather than waiting for final text.