Featured Product

    ISDA and AFME Respond to Interim Report on Climate Benchmarks in EU

    August 07, 2019

    ISDA and Association for Financial Markets in Europe (AFME) responded to the interim report on climate benchmarks and environmental, social and governance (ESG) disclosures of benchmarks by the EU Technical Expert Group (TEG) on sustainable finance. ISDA-AFME discusses the need for flexibility in benchmark methodologies and proportionality in relation to ESG disclosure requirements under the EU Benchmarks Regulation.

    Proportionality in the European Benchmarks Regulation shall apply in relation to ESG disclosures for non-ESG benchmarks. ISDA and AFME would welcome that the requirements for non-significant benchmarks in relation to ESG criteria and carbon emissions disclosures should follow a consistent proportionality approach—that is, ESG disclosure requirements for significant benchmarks shall be more comprehensive than for non-significant benchmarks. ISDA and AFME would welcome the TEG final report to reflect this proportionality, as disclosure of ESG factors and Key Performance Indicator (KPIs) should be in the form of guidelines rather than being mandatory for non-significant benchmarks. 

    Differentiation by asset class, type of benchmarks, and investor need is necessary for effective ESG disclosures. Given the characteristics and diversity of benchmarks, ISDA and AFME welcome the TEG approach to adapt disclosure requirements to different asset classes. ISDA and AFME welcome that derivative instruments for the transfer of credit risk, such as credit default swaps or CDS, should not apply ESG disclosure, agreeing with the TEG analysis that setting any ESG disclosures for a CDS index would essentially require disclosing the characteristics of a second-level structured product. ISDA and AFME support an exemption of the ESG disclosures for all derivatives benchmarks that do not specifically pursue ESG objectives. ISDA and AFME would like to call on EC to consider the different types of investment styles when preparing the delegated act on minimum requirements for ESG disclosure.

    Availability of high-quality and affordable data needs to be enhanced. ISDA and AFME support the TEG recommendation for a non-disclosure option in the template for the methodology and the benchmark statement. This is also in line with the primary legislation (level 1 text of the EU Benchmarks Regulation). If ESG data disclosure requirements are too rigid, the required growth of the ESG market, needed to fulfill the overarching objective of the sustainable finance agenda may be jeopardized. To facilitate the availability of data, the co-legislators and the EC, depending on the type of legislation, shall align disclosure requirements resulting from other financial services legislation with the requirements of the Benchmarks Regulation. 

     

    Related Links

    Keywords: Europe, EU, Banking, Securities, Sustainable Finance, Climate Benchmarks, ESG, Disclosures, Proportionality, Benchmarks Regulation, AFME, ISDA

    Related Articles
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance for New Prudential Standard on Remuneration

    The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.

    October 18, 2021 WebPage Regulatory News
    News

    OCC Updated LIBOR Self-Assessment Tool for Banks

    The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).

    October 18, 2021 WebPage Regulatory News
    News

    TCFD Updates Guidance for Financial Disclosures on Climate Risk

    The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

    October 14, 2021 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel III Framework

    The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.

    October 14, 2021 WebPage Regulatory News
    News

    ACPR Implements Updates Related to DPM Version 3.1

    The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.

    October 14, 2021 WebPage Regulatory News
    News

    EBA Note Examines Transition Risks of Benchmark Rates

    The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.

    October 14, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7571