Regulation (EU PAB, EU CTB) on climate reference values 2019/2089

Regulation of the European Parliament and of the Council (EU) 2019/2089 EU Paris-aligned Benchmark (EU PAB); EU Climate Transition Benchmark (EU CTB) of 27 November 2019 amending Regulation (EU) 2016/1011 as regards EU benchmarks for investment in climate change economic transformation EU investment benchmarks in line with the Paris Agreement and benchmarks for sustainability disclosure (Text with EEA relevance)

This Regulation enters into force on the day following its publication in the Official Journal of the European Union.

Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 amends Regulation (EU) 2016/1011 and his goal is improve the transparency and integrity of benchmarks used in investments, especially with regard to the goals of the Paris Agreement on climate change.

The regulation introduces two new categories of reference values:

• EU benchmark for investment in the transformation of the economy in relation to climate change: This benchmark aims to select assets that are in line with the decarbonisation process.
• EU benchmark for investments in line with the Paris Agreement: This benchmark aims to select assets whose carbon emissions are in line with the Paris Agreement targets.

The regulation provides requirements for providers of these benchmarks, including:

• Disclosure of information on methodology: Providers must disclose detailed information on the methodology used to calculate the benchmark, including the criteria for selecting and weighting assets and the method of measuring carbon emissions.
• Considering ESG factors: Providers must state in their benchmark statements whether and to what extent their benchmarks pursue ESG (environmental, social and governance) objectives.
• Efforts to decarbonize: By 2022, providers of EU benchmarks for economic transformation investments must select assets issued by companies that follow a decarbonisation process.
• Exclusion of certain sectors: The Commission identifies sectors to be excluded from the EU investment benchmarks in line with the Paris Agreement because they do not have measurable carbon reduction targets.
• Regular review of the methodology: Providers must regularly review their methodologies and inform users of any material changes.

Regulation (EU) 2019/2089 contributes to achieving the goals of the Paris Agreement by:

• Increases transparency in the area of low-carbon investments.
• It helps investors make informed decisions about sustainable investments.
• It supports the transition to a low-carbon economy.

Regulation entered into force the day following its publication in the Official Journal of the European Union.