Regulation amending the Benchmarks Regulation published

Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) 2016/1011 (the “Benchmarks Regulation”) as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures (the “Amending Regulation”) was published on 9 December 2019 in the Official Journal of the European Union. It also includes extension of certain transitional periods.

Please see below for more detail on the main amendments to the Benchmarks Regulation introduced by the Amending Regulation and first described in our newsflash published on 15 April 2019:

  • Introduction of new regimes for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks.

The two new regimes aim at creating reliable and easily recognisable labels for environmentally aware investors across the EU with the goal of promoting investments in environmentally responsible companies and environmentally friendly technologies. These new regimes should thus ultimately contribute to the implementation of the UN Paris Agreement on climate change and help to avoid greenwashing.
Together with the sustainability-related disclosures introduced for the broader financial services community by the Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability‐related disclosures in the financial services sector, published on the same day and described in a separate newsflash dated 12 December 2019, these new regimes are part of a broader action plan of the European Commission on sustainable finance specifically aiming to:

  • reorient capital flows towards sustainable investment in order to achieve sustainable and inclusive growth;
  • manage financial risks stemming from climate change, resource depletion, environmental degradation and social issues; and
  • foster transparency and long-termism in financial and economic activity.
  • Third country benchmarks – to allow time for a possible broader overhaul of the third country regime in the Benchmarks Regulation, which is currently part of a consultation issued by the European Commission on possible changes to the Benchmarks Regulation, transitional period for new use of non-compliant benchmarks issued by non-EU administrators has been extended to 31 December 2021.
  • Critical benchmarks – to allow time for an orderly transition away from interbank offered rates, explained in our newsflashes dated 19 July 2019 and 2 October 2019 and a short video, supervised entities will benefit from an extension of the transitional period for use of non-compliant benchmarks designated as critical benchmarks in accordance with the Benchmarks Regulation to 31 December 2021.