EU: Changes to Benchmark Regulation for Sustainable Finance

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The recent changes to the Benchmark Regulation ease the rules for administrators of non-significant benchmarks, excluding them from the scope of BMR application. This simplification reduces the regulatory burden for small and medium-sized enterprises in the financial sector, promoting a leaner and less costly approach. However, a regime of voluntary adherence has also been introduced, allowing administrators to choose, under certain conditions, to apply the BMR provisions. This flexibility aims to better meet market needs, adapting to the specific characteristics of individual sectors.

The Benchmark Regulation will continue to regulate significant and critical benchmarks, along with climate benchmarks, including the Paris-Aligned Benchmarks (PAB) and the Climate Transition Benchmarks (CTB). These tools play a crucial role in achieving the climate goals of the European Union. The amendments to the regulation mainly concern the PAB and CTB benchmarks, with new provisions that exempt significant benchmark administrators from the obligation to offer a PAB or CTB. Additionally, these tools and their administrators will be subject, where appropriate, to mandatory registration, authorization, recognition, or approval, thereby ensuring stricter supervision aligned with European standards on sustainable finance.

In parallel with the simplification for minor benchmarks, the regulation strengthens the provisions related to climate benchmarks, in line with the objectives of the Paris Agreement. The Paris-Aligned Benchmarks (PAB) and the Climate Transition Benchmarks (CTB) remain subject to strict regulations, emphasizing the EU's commitment to sustainable finance. Benchmark administrators that reference environmental, social, and governance (ESG) factors in their legal or marketing documents are now required to explain in detail how their methodology integrates such factors, increasing transparency and combating greenwashing. A supervisory role is assigned to the European Securities and Markets Authority (ESMA). The ESMA will now have the responsibility to supervise the approval of benchmark administrators from third countries, creating a unique entry point for such administrators in the EU.

The European Commission will assess the effectiveness of the changes to the Benchmark Regulation with a report expected by June 30, 2029. This document may include a legislative proposal for further revisions, aiming to ensure consistency between benchmark information with ESG statements and the requirements of the Sustainable Finance Disclosure Regulation (SFDR), whose review is expected in the fourth quarter of 2025. The changes have already received approval from the Economic and Monetary Affairs Committee (ECON) of the European Parliament on January 16, 2025. The final vote in plenary session is scheduled for May 6, and once published in the Official Journal of the EU, the regulation will enter into force 20 days later. The new provisions will be applicable from January 1, 2026, allowing industry operators the necessary time to adapt to the new regulatory framework.

This article was created as part of the "Biodiversity services EU expansion" project (CUP: E43D22000480009) supported by the Lombardy Region call "PR FESR 2021-2027 – LINEA INTERNAZIONALIZZAZIONE 21-27", aimed at supporting the internationalization of Italian companies. 3Bee is the naturetech company that develops innovative technologies for monitoring, protecting, and regenerating biodiversity, supporting companies in defining personalized climate strategies based on the analysis of their impacts and dependencies on nature. With a strong portfolio in Italy, Germany, and France and notable partnerships, 3Bee continues its expansion into international markets to create a concrete impact through technology.