Commission adopts new rules for EU Climate Benchmarks
On 17 July 2020, new rules have been adopted which set out minimum technical requirements for EU Climate Benchmarks, as well as a number of Environmental, Social and Governance (ESG) disclosure requirements.
EU Climate Benchmarks help investors who wish to adopt climate-conscious investment strategies and make informed decisions. They address the risks of greenwashing, the practice of financial products being marketed as 'green' or more generally 'sustainable', when in fact they do not meet basic environmental standards.
Delegated act sets out the technical requirements that a benchmark needs to include if it is to be labelled as an EU Climate Benchmark. For example, the sectors to which the benchmark is allocated are required to reduce their carbon emissions from one year to the next, and exclude assets that significantly harm ESG objectives.
Today's new rules also set out a number of Environmental, Social and Governance (ESG) disclosure requirements for benchmark administrators, including disclosures related to the Paris Agreement – the first-ever universal, legally binding global climate change agreement.