The European Union’s ‘Action Plan on Financing Sustainable Growth’ has published into law two new categories of climate benchmarks and ESG disclosures for benchmarks. What are the implications for investors?
As part of the EU effort to transition to a sustainable economy , the European Commission published an ‘Action Plan on Financing Sustainable Growth’ in May 2018 with the aim to integrate sustainability risks, opportunities and targets into the European regulatory framework and to mobilise investment towards sustainable growth.
The Action Plan outlines several legislative initiatives, the first package of which includes an EU classification system/Taxonomy to determine whether an economic activity is sustainable, disclosure requirements for a range of financial market participants and new measures regarding investment benchmarks. The Commission set up a Technical Expert Group on Sustainable Finance (TEG) to assist in developing some of these initiatives.
This guide focusses on the introduction of two new categories of climate benchmarks and associated ESG disclosures applicable to all benchmarks. The new climate benchmarks provide for a harmonised, reliable tool to pursue low-carbon investment strategies by establishing a new category of financial benchmarks.
Benchmark administrators must comply with the new requirements by 30 April 2020. The new requirements will be incorporated into the EU Benchmarks Regulation, which is separately under review by the Commission and will likely result in strengthened supervision and governance of climate benchmark administrators.
This information is for informational purposes only, not to be construed as investment advice or a recommendation or offer to buy or sell any security. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients. There are no guarantees regarding the achievement of investment objectives, target returns, portfolio construction, allocations or measurements such as alpha, tracking error, stock weightings and other information ratios. The views and strategies described may not be suitable for all investors. SSGA does not provide tax or legal advice. Prospective investors should consult with a tax or legal advisor before making any investment decision. Investing entails risks and there can be no assurance that SSGA will achieve profits or avoid incurring losses.
Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, so you may have a gain or loss when shares are sold. Current performance may be higher or lower than that quoted.
Images of NYSE Group, Inc. are used with permission of NYSE Group, Inc. Neither NYSE Group, Inc. nor its affiliated companies sponsor, approve of or endorse the contents of this program. Neither NYSE Group, Inc. nor its affiliated companies recommend or make any representation as to possible benefits from any securities or investments.