Finance Watch

Climate-friendly benchmark rules will help fight against greenwashing

Sustainable finance

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Brussels, 13th December 2018 – Finance Watch welcomes today’s vote by the European Parliament’s ECON Committee on the proposal for a regulation in order to better define  climate benchmarks.

Nina Lazic, Research and Advocacy Officer at Finance Watch, said:

“The proposed definitions are an important step in fighting greenwashing because they will harmonise the methodologies behind the hundreds of self-labelled benchmarks that index providers currently market as climate-friendly. This should build confidence that climate-friendly benchmarks do what they claim to. 

“We also welcome that the text requires all benchmarks to disclose how they impact the climate and how far they align with Paris goals. This will create a baseline for investors to compare with climate-friendly products and so accelerate the shift to climate-friendly investing. 

“Unfortunately, the text does not set minimum standards for broader sustainability benchmarks; we hope this can be remedied in future.”

In its proposed definitions, the ECON report makes explicit the link with the Paris Agreement goals, which was missing in the Commission’s initial proposal. The proposal defines:

  1. a climate transition benchmark, which aims to include companies which are on a science-based trajectory to reduce scope 1, 2 and 3 carbon emissions towards alignment with Paris Agreement goals; and
  2. a Paris-aligned benchmark, defined as the benchmark which is aligned with a 1.5 °C Paris Climate Commitment.

The two proposed definitions will provide a minimum level of harmonisation for the benchmarks labelled as climate transition or Paris-aligned benchmarks, although their effectiveness will ultimately depend on the upcoming delegated acts that will translate those definitions – if also approved in the final text – into minimum standards.

Unfortunately, the proposal does not set minimum standards – or even promote best practices – for the broader group of sustainability benchmarks. We hope this oversight can be remedied in future.

 

ENDS

For further information or interview requests, please contact:

Charlotte Geiger, Senior Communications Officer at Finance Watch, at charlotte.geiger@finance-watch.org or at 0032/(0)474331031.

 

NOTES

The European Commission’s proposal for a regulation on low carbon benchmarks and positive carbon impact benchmarks (2018/0180 (COD)) was published on 24 May 2018. It amends Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts.

Finance Watch published its response to the public consultation on 3rd August 2018.

The draft report of the European Parliament’s Committee on Economic and Monetary Affairs was published on 27 September 2018, and its amendments on 29 October 2018.

The ECON committee has also positively voted to open interinstitutional negotiations on the basis of the report as adopted today.

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