CLIMATE BENCHMARKS: The European Union misses out on the Paris Agreement

The European Union has introduced the Paris Aligned Benchmark (PAB) and the Climate Transition Benchmark (CTB) to standardize green financial indices. However, Reclaim Finance argues these benchmarks are inadequate because they focus on carbon intensity rather than absolute emissions reductions and fail to exclude companies developing new fossil fuel projects. The briefing highlights the risk of greenwashing in passive index management, where assets under management exceed $10 trillion, and calls for stricter criteria, including absolute emission targets and a phased exit from fossil fuels by 2040 in OECD countries and 2050 globally.

• The EU's benchmarks regulation creates two standards, the Paris Aligned Benchmark (PAB) and the Climate Transition Benchmark (CTB), to provide minimum criteria for green financial indices. These are intended to make finance compatible with the Paris Agreement, particularly for passively managed funds, which represent over 20% of global assets under management.
• Both the PAB and CTB are criticized for requiring a 7% annual reduction in carbon intensity rather than absolute greenhouse gas emissions. This allows total emissions to increase or stagnate, and permits individual companies to remain in an index even if they do not meet the trajectory, provided other companies exceed the target.
• The Climate Transition Benchmark (CTB) uses a “best-in-class” approach that excludes only the worst companies in each sector, meaning it does not exclude any specific activity or require the phase-out of activities incompatible with a 1.5°C warming limit.
• While the Paris Aligned Benchmark (PAB) excludes companies with high revenue shares from coal (>1%), oil (>10%), and gas (>50%), it fails to exclude companies developing new fossil fuel projects if they remain below these revenue thresholds.
• To achieve true alignment with the Paris Agreement, the document recommends adding criteria to the PAB, including a 7% absolute emissions reduction target, the exclusion of new fossil fuel projects, and a gradual phase-out of oil and gas by 2040 in European and OECD countries and by 2050 elsewhere.

APA

Cuvelier, L., Pinson, L., & Schreiber, P. (2020). CLIMATE BENCHMARKS: The European Union misses out on the Paris Agreement. Reclaim Finance. https://reclaimfinance.org/site/wp-content/uploads/2020/11/Note-climate-benchmarks-the-european-union-misses-out-on-the-paris-agreement.pdf

Chicago

Cuvelier, Lara, Lucie Pinson, and Paul Schreiber. CLIMATE BENCHMARKS: The European Union misses out on the Paris Agreement. Reclaim Finance, 2020. https://reclaimfinance.org/site/wp-content/uploads/2020/11/Note-climate-benchmarks-the-european-union-misses-out-on-the-paris-agreement.pdf.

Wikipedia

{{cite report |last1=Cuvelier |first1=Lara |last2=Pinson |first2=Lucie |last3=Schreiber |first3=Paul |title=CLIMATE BENCHMARKS: The European Union misses out on the Paris Agreement |publisher=Reclaim Finance |date=November 2020 |url=https://reclaimfinance.org/site/wp-content/uploads/2020/11/Note-climate-benchmarks-the-european-union-misses-out-on-the-paris-agreement.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cuvelier2020climate, author = {Cuvelier, Lara and Pinson, Lucie and Schreiber, Paul}, title = {{CLIMATE BENCHMARKS: The European Union misses out on the Paris Agreement}}, institution = {Reclaim Finance}, year = {2020}, month = nov, url = {https://reclaimfinance.org/site/wp-content/uploads/2020/11/Note-climate-benchmarks-the-european-union-misses-out-on-the-paris-agreement.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }