Featured Product

    EC Welcomes Agreement on New Generation of Low-Carbon Benchmarks

    February 25, 2019

    EC welcomed the political agreement reached by the European Parliament and member states on a new generation of low-carbon benchmarks needed to help boost investment in sustainable projects and assets. The European Parliament and Council still have to formally approve the rules. This agreement creates two new categories of low-carbon benchmarks: a climate-transition benchmark and a specialized benchmark that brings investment portfolios in line with the Paris Agreement goal to limit the global temperature increase to 1.5˚above the pre-industrial levels. In addition to the proposal to regulate benchmarks for low-carbon investment strategies (provisionally agreed), these measures also included a proposal to establish a unified EU classification system (taxonomy) of sustainable economic activities and a proposal to improve disclosure requirements related to sustainability risks and opportunities.

    Separately, the EU institutions also agreed to grant providers of “critical benchmarks”—interest rates such as Euribor or EONIA—two extra years until December  31, 2021 to comply with the new Benchmark Regulation requirements. Given the crucial importance of third-country benchmarks for EU companies, the extra two years for benchmarks produced outside the EU was also introduced to provide additional time for work with non-EU regulators on how these benchmarks can be recognized as equivalent or otherwise endorsed for use in the EU.  The Permanent Representatives Committee (COREPER) of the Council of Ministers and the European Parliament will have to formally adopt the new rules before they can enter into force.

    First proposed by EC in May 2018, the rules agreed now support the goals of the Capital Market Union to connect finance with needs of the economy and the EU agenda for sustainable development.  The two new categories are voluntary labels designed to orient the choice of investors that wish to adopt a climate-conscious investment strategy. The climate-transition benchmark will offer a low-carbon alternative to the commonly used benchmarks.The Paris-aligned benchmark will only comprise companies that can demonstrate that they are aligned with a 1.5˚ target. The new labels are designed to give additional assurances to avoid “greenwashing”—that is, that investors are deceived by misleading or unsubstantiated claims about the environmental benefits of a benchmark. A technical expert group will now advise EC on how to select the companies eligible for inclusion in the new benchmarks. The expert group will also advise on whether to exclude certain sectors of economic activity from the specialized Paris-aligned benchmark.

    Once the expert group has given its advice, EC will propose delegated rules that cover the composition of both benchmarks in further detail. Valdis Dombrovskis, Vice-President responsible for the Euro and Social Dialog, also in charge of Financial Stability, Financial Services and Capital Markets Union, said: "With this agreement, investors will benefit from two reliable benchmarks to pursue their ambitious climate strategies. This is a milestone of the Commission action plan on financing sustainable growth, participating in reorienting capital flows towards sustainable investment."  

     

    Related Links

    Keywords: Europe, EU, Banking, Securities, Insurance, Sustainable Finance, Climate Change Risks, Low Carbon Benchmarks, Capital Markets Union, EC

     

    Related Articles
    News

    BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks

    A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.

    July 29, 2022 WebPage Regulatory News
    News

    EBA Publishes Multiple Regulatory Updates for Regulated Entities

    The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.

    July 29, 2022 WebPage Regulatory News
    News

    APRA Consults on Prudential Standard for Operational Risk

    The Australian Prudential Regulation Authority (APRA) is seeking comments, until October 21, 2022, on the introduction of CPS 230, which is the new cross-industry prudential standard on operational risk management.

    July 28, 2022 WebPage Regulatory News
    News

    EC Amends Rule on Securitizations; ESRB Updates Reciprocation Measures

    The European Commission published a Delegated Regulation 2022/1301 on the information to be provided in accordance with the simple, transparent, and standardized (STS) notification requirements for on-balance-sheet synthetic securitizations.

    July 27, 2022 WebPage Regulatory News
    News

    APRA Announces Revisions to Capital Framework for Banks

    The Australian Prudential Regulation Authority (APRA) is announced revisions to the capital framework for authorized deposit-taking institutions to implement the "unquestionably strong" capital ratios and the Basel III reforms.

    July 26, 2022 WebPage Regulatory News
    News

    EBA Examines Remuneration Data and Use of Large Exposure Exemptions

    The European Banking Authority (EBA) published a report that examines the use of certain exemptions included in the large exposures regime under the Capital Requirements Regulation (CRR).

    July 22, 2022 WebPage Regulatory News
    News

    UK Authorities Publish Discussion Paper on Critical Third Parties

    The Bank of England (BoE), the Prudential Regulation Authority (PRA), and the Financial Conduct Authority (FCA) published a joint discussion paper that sets out potential measures to oversee and strengthen the resilience of services provided by critical third parties to the financial sector in UK.

    July 22, 2022 WebPage Regulatory News
    News

    BoE Issues Update on Ongoing Data Transformation Program

    The Bank of England (BoE) issued a communication to firms to provide an update on the progress of the joint data transformation program—which is being led by BoE, the Financial Conduct Authority (FCA), and the industry—for the financial sector in UK.

    July 21, 2022 WebPage Regulatory News
    News

    EBA Issues Draft Methodology and Templates for 2023 Stress Tests

    The European Banking Authority (EBA) published the draft methodology, templates, and template guidance for the European Union-wide stress test in 2023.

    July 21, 2022 WebPage Regulatory News
    News

    EBA Issues SREP Guidelines and Standards for Investment Firms

    The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) jointly published the final guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) for investment firms.

    July 21, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8407