Explanation on how ESG factors are reflected in the benchmark methodology
Article 1
1. Benchmark administrators shall explain, using the template laid down in the Annex to this Regulation, which of the environmental, social and governance (ESG) factors referred to in Annex II to Commission Delegated Regulation (EU) 2020/1816 ( 4 ) they have taken into account when designing their benchmark methodology. They shall also explain how those factors are reflected in the key elements of that methodology, including for the selection of underlying assets, weighting factors, metrics and proxies. The requirement set out in the first subparagraph shall not apply to commodity benchmarks. 2. For individual benchmarks, benchmark administrators may, rather than providing all the information required by the template laid down in the Annex to this Regulation, replace that information by a hyperlink in the explanation provided, to a website that contains all that information. 3. Where benchmarks blend different types underlying assets, benchmark administrators shall explain how ESG factors are reflected for each of the relevant underlying asset. 4. Benchmark administrators may include in the explanation provided additional ESG factors and related information. 5. Benchmark administrators shall clearly state in the explanation provided whether they do or do not pursue ESG objectives. 6. Benchmark administrators shall include in the explanation provided a reference to the sources of data and standards used for each ESG factor disclosed.