On 8 November 2019, the Council of the EU [...] announc[ed] the adoption of legislative reforms that aim to enhance the proposed capital markets union. Notably, two of the reforms are related to sustainable finance: the Low Carbon Benchmark Regulation (LCBR), and the Disclosure Regulation...

The LCBR amends the previous Benchmarks Regulation, and was introduced in response to the perceived lack of uniformity among existing low-carbon indices...

To combat these issues, the LCBR introduces the following:

• A new category of benchmarks, comprising two types of financial benchmark: an EU climate transition benchmark, and a “Paris-aligned” benchmark...
• An obligation for all benchmarks [...] to disclose [...] whether or not their benchmarks pursue environmental, social, and corporate governance (ESG) objectives...
• An extension of the transition regime under the Benchmarks Regulation to 2021, for critical and third-country benchmarks...

[T]he LCBR empowers the European Commission to lay down the specific minimum standards for the two new benchmarks... [T]he Commission will take into account the work of the Technical Expert Group on Sustainable Finance, which published a final report on the climate-related benchmarks [...] on 30 September 2019...

The Disclosure Regulation governs ESG disclosure requirements for financial market participants and financial advisers, and how those firms integrate ESG factors into their investment decisions... The next step is for European supervisory authorities to come up with specific and detailed rules for the implementation of the Disclosure Regulation...