Scientific Beta

Corporate Adviser: "EU sustainable benchmark proposals will benefit ESG data providers rather than redirect investments to climate transition argues Scientific Beta CEO and EDHEC Business School associate dean for business development Noël Amenc".

Corporate Adviser 28/04/2020

"(...) Instead of specifying how explanations on the incorporation of ESG dimensions should be provided, the TEG proposals establish long lists of ESG indicators – 25 for public equity benchmarks – to be computed and disclosed. If implemented, these disclosures would entail considerable administrative and data acquisition costs. The EC has not undertaken any impact study on the costs and benefits of these proposals. The working group that prepared the proposals is skewed towards providers of ESG data and services and under-represented by potential end-users of benchmarks, especially pension funds. The proposals would primarily, and arguably almost exclusively, benefit providers of ESG data and services. Ultimately, by making ESG disclosures especially onerous, the TEG proposals discourage the incorporation of ESG dimensions into benchmarks, create a unique competitive disadvantage for climate and other ESG benchmarks, and de-incentivise voluntary adoption of disclosure. Drowning indicators of climate impact and risk in a mass of metrics unrelated to the subject will make the benchmark statement confusing. (...)"