The Regulation on the EU Climate Transition Benchmarks creates two new categories, or labels, of climate-related benchmarks:

• the EU climate transition benchmark which brings the resulting benchmark portfolio on a decarbonisation trajectory; and
• the EU Paris-aligned benchmark which brings the resulting benchmark portfolio's carbon emissions in line with the Paris Climate Agreement goal to limit the global temperature rise to 1.5C° compared to pre-industrial levels.

For these two new benchmarks, the EC has mandated its Technical Expert Group on Sustainable Finance to assist with the development of a methodology, weighting method of the underlying assets and the criteria for the choice of the underlying assets. In addition, all benchmarks except for interest rate and currency benchmarks, within their benchmark statement, should disclose whether they pursue ESG objectives and have to provide an explanation of how their methodology reflects ESG factors.

In April 2020 ESMA issued a No Action Letter to promote coordinated action by National Competent Authorities (NCAs) regarding the new ESG disclosure requirements for benchmark administrators under the Benchmarks Regulation. In addition, ESMA also issued an Opinion to the European Commission on the need for prompt adoption of the relevant Delegated Acts.

In December 2020, the relevant delegated acts supplementing the Benchmarks Regulation were published.