The EU ESG Ratings Regulation, which will enter into application on July 2, 2026, introduces formal oversight for providers of ESG ratings in the European Union, with the goal of strengthening transparency, good governance, and independence across the industry.
As a provider of broad sustainability intelligence solutions, we welcome the introduction of common standards for the market and intend to apply for authorization for the provision of our ESG ratings products as soon as the regulatory application process opens.
We believe this framework is an important step toward building greater trust by making transparency and accountability in sustainability ratings and scores compulsory. Clarity AI has adopted this approach from the beginning and partnered with market participants to achieve that.
Clarity AI, a leading voice in shaping the regulatory framework
Clarity AI has been a leading voice in the development of standards, policy, and regulation related to transparent and robust sustainability insights. For more than three years, we have been engaging with key European bodies, including the European Commission and the European Securities and Markets Authority (ESMA), to help shape the regulation.
In particular, Clarity AI has supported the development of a regulation that encourages a technology-led approach to delivering sustainability insights. As well as enhancing the quality, scale, and speed of delivery, our own AI-native approach supports the overarching objectives of the regulation to enhance transparency and control any conflicts of interest.
Alongside its bilateral engagement, Clarity AI has established its position as a leading industry voice. For the past two years, it has chaired the Future of Sustainable Data Alliance (FoSDA) Policy and Regulation Working Group. This group comprises the major sustainability intelligence providers within the European Union.
As the elected Chair of this group, Clarity AI has also played a pivotal role in spearheading the industry’s input into the development of the European Commission’s regulatory text and the accompanying ESMA standards.
Strengthening transparency and trust in ESG Ratings
The EU ESG Ratings Regulation aims to address key industry challenges by introducing standards that:
- Increase transparency of methodologies, data sources, and rating processes
- Strengthen governance, systems, and internal controls
- Reduce conflicts of interest in ESG ratings businesses
Clarity AI believes these measures will help investors access more transparent, reliable, and comparable sustainability insights, supporting better-informed investment decisions.
Clarity AI’s longstanding commitment to these principles
The principles behind the regulation have been central to Clarity AI’s approach since its founding.
As a company, we are already aligned with international best practices derived from IOSCO recommendations for ESG rating providers, including signing the following industry codes of conduct:
- ICMA Code of Conduct for ESG Ratings and Data Products Providers
- Japan Code of Conduct for ESG Evaluation and Data Providers
- Hong Kong Code of Conduct for ESG Ratings and Data Products Providers
- Singapore Code of Conduct for ESG Ratings and Data Products Providers
These commitments reflect Clarity AI’s broader goal of raising industry standards and promoting transparency across sustainability ratings.
A technology-driven approach to transparency and independence
Clarity AI’s model is designed to support the transparency and independence that the regulation seeks to promote.
Clarity AI ensures that every ESG rating can be traced directly back to its underlying data and methodology, providing a level of transparency and auditability that is critical for investors and regulators. Our models are designed to support the transparency and independence that the regulation seeks to promote.
Key elements include:
- Transparent Methodologies & Quality:
- Full visibility into data sources and scoring calculations, with access to methodologies.
- Independence & Strong Governance:
- Strict ethics and compliance frameworks, supported by a business model purposefully designed to maintain independence (avoiding structural overlap with activities like benchmarking, auditing, or credit ratings).
- Traceable, Technology-Based Processes:
- Scalable insights powered by advanced AI and award-winning technology. This minimizes manual bias to deliver evidence-based assessments and ensures a clear, automated audit trail from raw data extraction to the final output.
What comes next
Once the regulation enters into application, ESG rating providers operating in the EU will be required to apply for authorization in order to continue providing ESG ratings.
Clarity AI will submit its application as soon as the regulatory process opens.
During the application period, Clarity AI’s services will continue to operate without disruption. Our clients and partners will be informed once authorization has been granted. If you’d like to learn more about our ESG ratings and methodologies, you can get in touch with one of our experts.
