In June 2023, the European Commission announced a package of reforms targeting the financial sector, with the aim of increasing its alignment with the European Green Deal objectives. "The is a very welcome development," says Andrew Henderson, Private Investment Funds and Financial Services partner, to The Drawdown. "a lot of the amendments seek to address shortcomings of the original texts. These should help firms to develop best practice standards in response." Objective benchmarking could prove an asset to inspire confidence. As part of the reforms, the European Commission is looking to introduce a supervisory regime for ESG rating providers under the watchful eyes of ESMA. Regulation means recognition and legitimacy – a positive development, says Henderson: “A market regulator cannot underwrite a particular rating agency and its ratings. Nevertheless, a regulatory license signals that the ratings process will follow a certain baseline standard."