SFDR Impact Series 2026: ESG Ratings Regulation – A Manager’s Perspective When Distributing Funds

• Published date: 07 July 2026
• Subject Matter: Corporate/Commercial Law, Compliance, Corporate and Company Law, Corporate Governance
• Law Firm: Maples Group
• Author: Silvia Nani, Ian Conlon and Michelle Barry

The EU's new ESG Ratings Regulation applies from 2 July 2026. Although aimed squarely at ESG rating providers, its effects will be felt right across the funds industry. In this edition of our SFDR Impact Series, we examine what this regulation means for asset managers distributing funds in and beyond the EU and set out the practical steps managers should be taking now.

Context and Relevance for Fund Distribution

The EU's new regime under Regulation (EU) 2024/3005 on the transparency and integrity of ESG rating activities (the “Regulation”) will begin to apply on 2 July 2026.

The Regulation forms part of the EU's broader sustainable finance framework. Its core objective is to improve the transparency, integrity, governance and independence of ESG rating activities, in response to concerns that ESG ratings can be opaque, difficult to compare and vulnerable to conflicts of interest.

For fund asset managers, the Regulation is not simply a compliance issue for ESG rating agencies. It will affect how ESG ratings are sourced, described and used in investment processes, due diligence, product governance and investor reporting. It will also affect how ESG ratings are used in fund marketing materials, particularly where funds are marketed to EU investors or where ratings are distributed or relied upon in the EU.

Regulation in Summary

From 2 July 2026, ESMA will become the direct supervisor of ESG rating providers offering their services in the EU. The Regulation requires ESG rating providers operating in the Union to be registered with, authorised by or otherwise recognised under the ESMA framework, depending on their status and location. It also introduces governance, organisational, conflict management and disclosure obligations for ESG rating providers, including requirements relating to the transparency of rating methodologies, models, key assumptions, data sources and the limitations of the ratings produced.

Impact Across the Fund Industry

The Regulation is directed principally at ESG rating providers, rather than asset managers as such. However, its practical effect will be felt across the funds industry because ESG ratings are widely used in portfolio construction, investment screening, stewardship, risk monitoring, manager selection, product classification, distributor due diligence and investor-facing ESG disclosures.

Managers that currently rely on third-party ESG ratings, proprietary ESG scores or group-level sustainability assessments should therefore treat the July 2026 application date as a prompt to review their ESG ratings dependencies and associated disclosures.

Who is in scope?

Direct...