ESMA Fines to ASG Rating Providers: Procedure and Risks in 2026

Key data

Agencies issuing ASG ratings in the European Union face a structured and enforceable sanctioning regime from 2026 onwards. The Delegated Regulation (EU) 2026/904, published on 30 July 2026, develops the procedure that the European Securities and Markets Authority (ESMA) will apply to impose fines and coercive fines on environmental, social and governance (ASG) rating providers supervised under Regulation (EU) 2024/3005.

This is not a theoretical rule: it defines with precision the steps of the sanctioning procedure, the defence rights of affected companies and the available remedies. For any ASG rating provider active in the EU, ignoring this regulation is equivalent to operating without knowing the rules of the game.

What does this regulation establish?

Delegated Regulation 2026/904 completes the sanctioning framework of Regulation (EU) 2024/3005, which established direct ESMA supervision of ASG rating providers. What this new text does is detail how the procedure develops from when ESMA detects a possible infringement until an economic sanction is imposed—or not.

The key elements it regulates are as follows:

• Sanctioning procedure deadlines: defined timeframes are established for each phase of the procedure, which requires ESMA to act with speed and gives predictability to investigated companies.
• Right to be heard: ASG rating providers have the right to be heard before any sanctioning decision is adopted.
• Access to the file: investigated companies can consult the documentation that ESMA has gathered against them, an essential guarantee for preparing their defence.
• Procedure phases: the regulation articulates the stages from the opening of the procedure to the final resolution, including the possibility of imposing coercive fines (periodic sanctions to force compliance) in addition to ordinary fines.
• Remedies: companies can submit comments and appeal sanctioning decisions adopted by ESMA.

This regulation does not set the maximum amounts of fines—that is done by Regulation (EU) 2024/3005—but rather the procedural guarantees and formal procedure that ESMA must follow before imposing sanctions.

Economic and operational impact

The economic impact of this regulation operates at two distinct levels:

For ASG rating providers: the existence of a formal and detailed sanctioning procedure makes non-compliance with the obligations of Regulation (EU) 2024/3005 a quantifiable economic risk. Coercive fines—designed to pressure compliance on an ongoing basis—can accumulate while the infringement persists. This means that a company that does not correct its conduct in time can accumulate successive sanctions.

For institutional investors and issuers: the tightening of supervision over ASG rating providers can result in changes in the availability, methodology or reliability of the ratings they use for their investment decisions and sustainability reporting. A sanctioned or investigated agency may see its operations altered, with direct consequences for those who depend on its ratings.

From an operational perspective, providers will need to strengthen their internal regulatory compliance systems to be able to respond quickly to ESMA's requirements within the deadlines established in the procedure.

Who does it affect?

• ASG rating providers supervised by ESMA: sustainability rating agencies registered or authorised to operate in the EU under Regulation (EU) 2024/3005. They are directly subject to the sanctioning procedure.
• Institutional investors: investment funds, insurance companies, pension funds and asset managers that use ASG ratings for their investment decisions and to comply with their own sustainability reporting obligations.
• Securities issuers: listed companies and entities that issue debt and whose ASG rating influences their access to sustainable financing.
• Regulatory compliance and ESG advisers: professionals who advise the above on the use and interpretation of ASG ratings.
• Legal and compliance departments of financial entities that must supervise the quality and regulatory status of their rating providers.

Practical example

An ASG rating agency based in Paris, registered with ESMA under Regulation (EU) 2024/3005, receives a communication from ESMA indicating that it has detected possible irregularities in its environmental rating methodology.

Thanks to the procedure established by Delegated Regulation 2026/904, the agency knows exactly what to expect:

1. ESMA must respect the deadlines established in each phase of the procedure before adopting a decision.
2. The agency has the right of access to the complete file that ESMA has compiled, being able to review all the documentation gathered.
3. Before any sanction, the agency can exercise its right to be heard, submitting formal comments.
4. If ESMA imposes a coercive fine to force correction of the methodology, the agency can appeal the decision through the available remedies.

Without this regulation, the procedure would lack formal structure. With it, both ESMA and the agency operate with clear rules, which reduces arbitrariness and allows legal defence to be planned in advance.

What should companies do now?

1. Verify own regulatory status: ASG rating providers must confirm whether they are subject to direct ESMA supervision under Regulation (EU) 2024/3005, as only in that case does this sanctioning procedure apply.
2. Review internal compliance systems: ensure that protocols exist to respond to ESMA requests within the procedure deadlines, including the ability to prepare comments in a timely manner.
3. Designate a contact person with ESMA: identify who in the organisation will manage communications with the supervisor in the event of a sanctioning procedure.
4. Review contracts with ASG rating providers (investors and issuers): include clauses that address what happens if the provider comes under ESMA investigation or sanction, to protect operational continuity.
5. Consult with legal advisers specialising in European financial regulation: the procedure has complex legal implications; having expert support before a procedure is opened is more efficient than reacting once it has begun.

Official source

Consult the complete regulation on the official source

Disclaimer: This article is for informational purposes only and does not constitute legal advice. For specific decisions, consult a qualified professional. Source: https://eur-lex.europa.eu/./legal-content/AUTO/?uri=OJ:L_202600904