EUROPE: EU Technical Expert Group on Sustainable Finance has issued its final report on climate benchmarks and benchmark’s ESG disclosures

Résumé

The agreement reached by the European co-legislators on the regulation amending Regulation (EU) 2016/2011, as part of the Commission’s Action Plan on Financing Sustainable Growth, resulted in two essential measures regarding investment benchmarks.

• The first is the creation of two types of climate benchmarks, i.e. the ‘EU Climate Transition Benchmark (EU CTB) and EU Paris-aligned Benchmark (EU PAB).
• The second measure is the definition of Environmental, Social and Governance (ESG) disclosure requirements that shall be applicable to all investment benchmarks.

The main objectives of the new climate benchmarks are to

• (i) allow a significant level of comparability of climate benchmarks methodologies while leaving benchmarks’ administrators with an important level of flexibility in designing their methodologies;
• (ii) provide investors with an appropriate tool that is aligned with their investment strategy;
• (iii) increase transparency on investors’ impact, specifically with regard to climate change and the energy transition;and
• (iv) disincentivize greenwashing.