Commission adopts new rules for EU Climate Benchmarks

These measures will prevent eventual greenwashing and will end the practice of financial products being marketed as 'green'

Photo: EU Valdis Dombrovskis.

Adhering to its sustainable finance agenda, the EU executive adopted on Friday new rules 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.

The new 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.

The new rules also set out a number of ESG disclosure requirements for benchmark administrators, including disclosures related to the Paris Agreement – the first-ever universal, legally binding global climate change agreement. This delegated act will further contribute to an increased level of transparency and comparability on the products offered to the public.

Executive Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union, commented that one of the main objectives of the Sustainable Finance policy is to harness the power of private capital to achieve a climate-neutral economy by 2050. Today’s delegated acts will help climate-conscious investors who want to make the right decision and invest in our transition towards a climate-neutral economy, he underscored. 

 

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