(Finance) – The European Supervisory Authority on Financed Markets (ESMA) believes that the strong growth of the ESG benchmark segment and the coexistence of divergent approaches to benchmark methodologies “cause fragmentation of the internal market because It is not clear to benchmark users what level of ambition underlies the different ESG benchmark categories“. This is what we read in the response to a consultation by the European Commission regarding the use of financial indices. For example, the absence of clear labeling raises questions about the inclusion of companies with a negative environmental or social impact in these parameters. of reference.
ESMA recalls that currently the only regulatory requirements applicable to ESG benchmarks are the disclosure requirements of the regulations. However, the Authority believes that these disclosure requirements “are not sufficient to ensure an adequate level of harmonization among the different ESG benchmarks provided “.
“There definition of minimum standards for harmonization of the methodology of these benchmarks is essential to guarantee a quality label and a high level of consumer and investor protection, “is added. Benchmarks are used by asset managers to choose investments for clients, even though their policies and management has led to allegations of greenwashing (a term meaning façade ecologism or environmentalism).
Furthermore, ESMA believes that the introduction of an ESG reference label by the European Union would be “a further support tool against greenwashing“. Enhanced transparency requirements on the methodology would help reduce information asymmetries between benchmark administrators and benchmark users and would help investors make an informed assessment of benchmark sustainability claims, according to ‘Authority.
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