ESMA issues No Action Letter on the new ESG disclosure requirements under the Benchmarks Regulation

ESMA and NCAs are aware of the difficulties encountered by administrators in fulfilling the new requirements in the BMR on ESG-related disclosures for benchmarks prior to the application of the related Delegated Acts. The new requirements are due to apply on 30 April 2020 and require benchmark administrators to include details of how ESG factors are reflected in their methodology documents and benchmark statements.

ESMA considers that it is necessary for NCAs to address the absence of the Delegated Acts through consistent risk-based supervisory and enforcement practices. 

Opinions to NCAs and European Commission

ESMA’s two opinions are:

1.    a No Action Letter to NCAs, provides ESMA’s opinion that NCAs should not prioritise supervisory or enforcement action against administrators regarding these new requirements until the Delegated Acts apply; and

2.    an Opinion addressed to the EC providing ESMA’s view that any delay in the adoption of the Delegated Acts should be avoided.

On 8 April 2020, the EC published the draft Delegated Acts for a one-month consultation period. Following their adoption by the EC, the Delegated Acts will be subject to a scrutiny period by the European Parliament and by the Council before they enter into force.

ESG Requirements for Benchmark Administrators

The new ESG-related disclosure requirements oblige benchmark administrators, by 30 April, to include:

·         in their methodology document an explanation of how the key elements of the methodology reflect ESG factors for each benchmark or family of benchmarks; and

·         in their benchmark statement an explanation of how ESG factors are reflected in each benchmark or family of benchmarks provided and published.