On 25 February 2019, the Council of the EU announced that had reached a preliminary agreement with the European Parliament on the proposal creating a new category of financial benchmarks aimed at giving greater information on an investment portfolio’s carbon footprint.

The announcement states that the two EU institutions have agreed on a harmonised tool to pursue low-carbon investment strategies by establishing a new category, comprising two types of financial benchmarks:

  • EU climate transition benchmarks: these aim to lower the carbon footprint of a standard investment portfolio. More precisely, this type of benchmark should be determined taking into account companies that follow a measureable, science-based “decarbonisation trajectory” by end-2022, in light of the long-term global warming target of the Paris Agreement.
  • EU Paris-aligned benchmarks: these have the more ambitious goal to select only components that contribute to attaining the 2°C reduction set out in the Paris Agreement.

The text reviews existing provisions of the Benchmarks Regulation by providing an extension of the transition regime for critical and third-country benchmarks until the end of 2021. Subject to technical finalisation of the text, the political agreement will now be submitted to EU ambassadors for endorsement.