Sustainability rating has been developed and shaped by actors within financial markets. Any analytical and systematic approach to the sustainability rating sector has been facing mainly a mélange of descriptions, statements and business practices of the market players involved.

The research question of this paper is to explore whether legal aspects of European credit rating-based and credit rating-directed regulation in the realm of financial markets might highlight modes of action which could function as a model for designing ‘rules’ on corporate sustainability rating. The paper starts with arranging the various concepts, instruments and approaches intertwined with sustainability rating such as CSR and SRI by means of definition and differentiation. The paper proceeds with taking stock of the structure and mechanisms of the sustainability rating sector in order to identify its malfunctions.

Against the backdrop of these preliminary findings on the sustainability rating sector the paper seeks to explore solutions to the shortcomings of the sustainability rating sector by considering the regulatory and supervisory regime for CRAs as a possible model.


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