EU Climate Transition Benchmarks

EU climate transition benchmarks are a type of financial index introduced by the European Union to provide investors with the information they need to invest in instruments that fight climate change.

Important notes on EU Climate Transition Benchmark

In finance, benchmarks are indices that are used as a term of comparison to assess the risk and return of financial investments and the skill of the manager;
EU climate transition benchmark are composed of financial assets issued by companies that have uptaken decarbonisation strategies;
Only benchmark constructed in accordance with the methods set out in Regulation (EU) 2019/2089 receive the appropriate EU label.

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The introduction of the EU climate transition benchmarks is part of a series of interventions by the European Commission aimed at strengthening the reliability and comparability of information in the financial sector. Thanks to these benchmarks, it is easier for a saver to recognise a financial product, e.g. a mutual fund, with a real positive impact on the climate. As a consequence, it is possible to avoid green washing phenomena and to direct investments towards activities that contribute to a transition towards reducing greenhouse gas emissions. In 2020, the European Commission also adopted a Delegated Regulation. This initiative introduced minimum standards to help index administrators develop EU benchmark for the climate transition.