ESMA Sets 2027 Priorities for ESG Ratings Oversight

The European Securities and Markets Authority has published its 2027 Work Programme, confirming it will begin processing applications and start supervising ESG rating providers next year alongside expanded oversight of external reviewers of European Green Bonds. The programme, guided by ESMA's 2023-2028 multi-annual strategy, marks what Chair Verena Ross described as a shift from preparation to delivery on the Savings and Investments Union agenda, with four flagship simplification initiatives on transaction reporting, funds reporting, the retail investor journey and risk-based supervision entering a new phase. The announcement sets out ESMA's regulatory priorities across sustainable finance oversight, capital markets integration and financial market technology for the year ahead, rather than announcing a single new rule.

 

New Supervisory Mandates Bring ESG Ratings Under Direct Oversight

 

ESMA's decision to begin supervising ESG rating providers directly addresses a long-standing gap in EU sustainable finance regulation, where ratings agencies assessing corporate ESG performance have operated with less direct regulatory scrutiny than credit rating agencies. Processing applications and beginning supervision in 2027 gives ESMA the ability to set conduct and methodology standards for an industry whose outputs feed directly into investor decisions, fund labelling and corporate reporting obligations across the bloc. Alongside this, ESMA will extend its oversight of external reviewers of European Green Bonds, the independent verifiers who confirm that bonds labelled green under the EU Green Bond Standard meet its criteria.

These additions sit alongside a broader expansion of ESMA's supervisory remit. The authority will also adapt to expanded responsibilities for benchmark administrators, advance supervision of consolidated tape providers, and continue oversight of Critical ICT Third-Party Service Providers under the Digital Operational Resilience Act, working jointly with the other European Supervisory Authorities. A review of the EMIR 3 reforms aimed at reducing the EU's dependence on clearing services located outside the bloc is also planned for 2027, part of a wider effort to strengthen the resilience of EU market infrastructure rather than rely on external providers for systemically important functions.

 

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Simplification and Market Integration Initiatives Move Into Delivery

 

The 2027 programme frames much of ESMA's work around reducing administrative burden without weakening investor protection. The four flagship simplification initiatives covering transaction reporting, funds reporting, the retail investor journey and risk-based supervision are intended to improve the usability of regulatory data and make supervision more effective, building on a separate report published the same day detailing simplification actions taken in 2026 and planned for 2027. ESMA will also support implementation of the Retail Investment Strategy, aimed at giving investors clearer and more accessible information when making investment decisions.

Market integration work is tied to the pace of EU legislative negotiations. ESMA expects co-legislators to reach final agreement on the Market Integration and Supervision Package in 2027, after which the authority will prepare for the resulting changes to its own mandates and responsibilities. In parallel, ESMA will implement the European Single Access Point, a centralised EU database for company and financial information, and manage the transition to T+1 settlement, shortening the standard settlement cycle for securities trades across the bloc. Both initiatives are core components of the Savings and Investments Union strategy to deepen and integrate EU capital markets.

 

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ESMA is also positioning itself for continued growth in crypto-asset and technology-driven markets. It will maintain cooperation with National Competent Authorities on supervising crypto-asset service providers under the Markets in Crypto-Assets Regulation, while advancing its own Data Platform and deploying AI-based tools to support supervisory work. Cybersecurity capabilities will be strengthened alongside continued analysis of the impact of artificial intelligence on financial markets, and tokenisation remains a stated priority, with ESMA expanding its work on the opportunities the technology could bring to EU capital markets.

Whether ESMA's timeline holds will depend heavily on external factors outside its direct control, chiefly how quickly co-legislators finalise the Market Integration and Supervision Package and how many ESG rating providers and green bond reviewers come forward for authorisation once the new supervisory regimes open. The pace of ESG ratings applications in particular will be an early test of how the market responds to direct EU oversight of an activity that has largely self-regulated until now, and will shape how quickly investors can rely on a harmonised standard for sustainability ratings across the bloc.

 

Source: The European Securities and Markets Authority (ESMA)