Benchmarks - ESMA adds new sustainability questions to its BMR Q&As

On 28 May 2021, ESMA updated its Q&As on the application of the Benchmarks Regulation (BMR).

A series of Q&As are included and these form a new Section 10, 'Questions and Answers on EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks', which is divided into two subsections.

The new Q&As raise the following issues:

ESG factors reflected in the benchmark statement and methodology

• whether an administrator must take into account all the ESG factors listed in Annex II of the Level 2 Delegated Regulation (the Delegated Regulation) in its explanation of how the key elements of the methodology reflect ESG factors (key elements explanation)
• whether an administrator can take into account additional ESG factors not listed in the Delegated Regulation in its key elements explanation
• what an administrator should disclose in its key elements explanation if it provides benchmarks that do not take into account any of the ESG factors listed in Annex II of the Delegated Regulation
• whether the details in Items 6 and 7 in Annex I of the Delegated Regulation include scores for each of the ESG factors listed in Annex II
• what an administrator should disclose in its benchmark statement if it provides benchmarks that pursue ESG objectives but which do not take into account any ESG factor listed in Annex II of the Delegated Regulation
• whether administrators can disclose that the benchmarks they provide do not pursue ESG objectives under Item 5 of Annex I of the Delegated Regulation but, at the same time, disclose the information listed in items 6 and 7 of that Annex

Templates in the benchmark statement and the methodology

• whether an administrator must use the templates provided in Annex I of the Delegated Regulation and the Annex of Delegated Regulation (EU) 2020/1817 when it chooses to make the information available on its website
• whether all administrators must disclose the elements set out in Section 3 of Annex I of the Delegated Regulation by 31 December 2021
• how administrators can comply with the requirement to clearly state whether they do or do not pursue ESG objectives pursuant to Article 1(5) of Delegated Regulation (EU) 2020/1817?
• what standards administrators should use for calculating the ESG factors listed in Annex II of the Delegated Regulation.

Other ESMA updates

At the same time as the changes to the BMR Q&As, ESMA published updates to its Q&As on

• the UCITS Directive - see our article here
• AIFMD - see our article here
• EMIR implementation
• MiFID II and MiFIR Investor Protection topics
• MiFIR data reporting topics
• SFTR Reporting
• CSDR; and
• Securitisation.