Report on benchmarks
24/06/2019 AEFR Visiter le site sourceExecutive Summary
The agreement reached by the European co-legislators on the
regulation amending Regulation (EU) 2016/2011, as part of the
Commission's Action Plan on Financing Sustainable Growth, resulted
in two essential measures regarding investment benchmarks. The
first is the creation of two types of climate benchmarks11, i.e.
the 'EU Climate Transition Benchmark (EU CTB) and EU Paris-aligned
Benchmark (EU PAB)’. The second measure is the definition of
Environmental, Social and Governance (ESG) disclosure requirements
that shall be applicable to all investment benchmarks12.
The main objectives of the new climate benchmarks are to (i) allow
a significant level of comparability of climate benchmarks
methodologies while leaving benchmarks’ administrators with an
important level of flexibility in designing their methodology; (ii)
provide investors with an appropriate tool that is aligned with
their investment strategy; (iii) increase transparency on
investors’ impact, specifically with regard to climate change and
the energy transition; and (iv) disincentivize greenwashing.
Context. While conceptually, the two types of climate benchmarks
are closely linked to the objectives of the Paris Agreement, the
TEG wants to clearly acknowledge the fact that the current state of
methodologies and available issuer-level data does not allow for an
evident and irrefutable conversion of climate scenarios into
detailed and informed portfolio construction methodologies at the
time of writing this report. In order to ensure the highest level
of ambition for climate benchmarks, the TEG therefore largely
relies on already available proxies and currently evolving
methodologies, sometimes already used by market participants. In
this context, the TEG also strongly recommends a review of all
minimum standards after a three-year period to ensure the highest
level of ambition for climate benchmarks in accordance with
potential future enhancements in the state of the research and
practices around scenario analysis applied to investment
strategies.