EU finalized the regulation (2019/2088) on sustainability‐related disclosures in the financial services sector and this regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. Regulation 2019/2088, which shall apply from March 10, 2021 with certain exceptions, lays down harmonized rules for financial market participants and financial advisers on transparency with regard to the integration of sustainability risks and the consideration of adverse sustainability impact in the processes and the provision of sustainability‐related information with respect to financial products. Also published was the regulation (2019/2089) on EU Climate Transition Benchmarks, EU Paris-Aligned Benchmarks, and sustainability-related disclosures for benchmarks. Regulation (EU) 2019/2089 amends the Benchmarks Regulation (2016/1011) and shall enter into force on the day following that of its publication in the Official Journal of the European Union.
In the absence of a harmonized framework to ensure the accuracy and integrity of the main categories of low-carbon benchmarks used in individual or collective investment portfolios, it is likely that differences in member states’ approaches will create obstacles to the smooth functioning of the internal market. To maintain the proper functioning of the internal market for the benefit of investors, to further improve the functioning of the internal market, and to ensure a high level of consumer and investor protection, it is appropriate to amend the Benchmarks Regulation by introducing a regulatory framework that lays down minimum requirements for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks at the EU level. It is important that such benchmarks should not significantly harm other environmental, social, and governance (ESG) objectives.
Introducing a clear distinction between EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks and developing minimum standards for each of those benchmarks would contribute to consistency among those benchmarks. The EU Paris-aligned Benchmark should be in line with the objectives of the Paris Agreement at the index level. To enable market participants to make well-informed choices, all benchmark administrators, with the exception of administrators of interest rate and foreign exchange benchmarks, should be required to disclose in their benchmark statement whether or not their benchmarks or families of benchmarks pursue ESG objectives and whether or not the benchmark administrator offers such benchmarks.
To ensure continued adherence to the selected objective of climate-change mitigation, administrators of EU Climate Transition Benchmarks and administrators of EU Paris-aligned Benchmarks should review their methodologies regularly and inform users of the applicable procedures for introducing any material change to those methodologies. When introducing a material change, benchmark administrators should disclose the reasons for that change and explain how that change is consistent with the initial objectives of the benchmarks. The Benchmarks Regulation introduced a transitional period in which index providers providing benchmarks on June 30, 2016 are to apply for authorization by January 01, 2020. The discontinuation of a critical benchmark could impact market integrity, financial stability, consumers, the real economy, and the financing of households and businesses in member states. The maximum period of the mandatory administration of critical benchmarks and the maximum period for mandatory contributions to such benchmarks should be extended to five years. Therefore, the Benchmarks Regulation has been amended accordingly.
Effective Date: December 29, 2019 (2019/2088); December 10, 2019 (2019/2089)
Keywords: Europe, EU, Banking, Insurance, Securities, Pensions, Disclosures, Climate Benchmarks, Paris Agreement, ESG, Regulation 2019/2088, Regulation 2019/20189, Sustainable Finance, Climate Change Risk, ESAs, EC
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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.
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.
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HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.