EU ESG Ratings Regulation enters into force, ESMA begins supervising MSCI, ISS, Sustainalytics

Regulation (EU) 2024/3005 became fully applicable on July 2, 2026, placing every ESG rating provider operating in the EU — regardless of where headquartered — under direct ESMA authorization and supervision for the first time in any jurisdiction. Existing providers such as MSCI, Morningstar Sustainalytics, ISS, and S&P Global must notify ESMA of intent to continue operating by August 2 and file full authorization applications by November 2, after which unauthorized providers must cease EU activity. For law firms, this creates immediate diligence work: clients that reference third-party ESG ratings in marketing, fund documentation, or SFDR Article 13 disclosures need to confirm their rating providers are on ESMA's registration track, and outside counsel should be advising on contractual contingencies if a provider fails to notify or is refused authorization. The regulation also amends SFDR to require disclosure of underlying rating information when ratings are used in marketing materials, adding a new compliance layer for asset managers and their counsel.