Sustainable Finance

Sustainable Finance

PensionsEurope has been at the forefront of shaping sustainable finance legislation, recognizing that these horizontally applicable rules profoundly affect pension funds. We champion a framework tailored to the unique nature of IORPs, which are social institutions operating in financial markets with highly diverse profiles, ranging from large-scale entities to smaller schemes, and distinct from the traditional financial institutions that have largely driven EU legislative focus. Our advocacy ensures that pension funds can meet sustainability objectives without compromising their fiduciary responsibilities or operational realitie

Overview of sustainable finance initiatives:
In July 2021, the EC published the new Sustainable Finance strategy, introducing a brown taxonomy to signal environmentally harmful activities and a social taxonomy to promote human rights and adequate living standards. In June 2023, the EC then published the Sustainable Finance Package, which expanded the EU Taxonomy and set rules for ESG rating providers, aiming to support companies, the financial sector, and private investment in transition projects. For 2024–2029, the Commission under Ursula von der Leyen plans to advance the EU Green Deal by refining legislation, tackling greenwashing, integrating transition finance, and streamlining the overall framework.
Key legislative files:
  1. The review of the Sustainable Finance Disclosure Regulation (SFDR):
In November 2025, the European Commission published its proposal to revise the SFDR framework (the so-called SFDR 2.0), aiming to simplify disclosures, reduce administrative burdens and address the widespread use of Articles 8 and 9 as de facto sustainability labels. In March 2026, we responded to the SFDR review consultation, stating that we welcome the European Commission’s aim to simplify SFDR 2.0, while warning that the proposed retail-oriented categorisation system does not fit occupational pensions. IORPs, as long-term institutional investors operating under fiduciary duty and liability-driven strategies, would be unfairly excluded from sustainability categories due to their diversified portfolios, including sovereign bonds, leading to misleading results and high compliance costs.
PensionsEurope therefore urges that Member States should be allowed to exempt IORPs from mandatory categorisation or, if included, that an IORP-specific RTS be developed, reflecting collective investment structures, long-term horizons, and the prudent person principle, with technical adjustments covering government bond treatment, 70% alignment threshold, member communication, proportional ESG supervision, and alignment with IORP II, CSRD, ESRS, and the EU Omnibus simplification package.
  1. Corporate Sustainability Due Diligence Directive (CSDDD):
We worked on the Corporate Sustainability Due Diligence Directive (CSDDD) published in February 2022, which initially would have had lot of implications for pension funds in their role as institutional investors. In September 2023 during the trilogues phase, we published a revised position paper highlighting our concerns.
  1. ESG ratings regulation:
We were also active on the ESG ratings regulation. We published our position paper following the EC’s proposal in June 2023. We indicated among other issues that the regulation should extend to ESG data itself.
  1. The Omnibus I package and ESRS:
In June 2025, we published on position paper on the EC’s first omnibus package. We welcome this initiative, which aims to align crucial EU legislation concerning Sustainable Finance. PensionsEurope firmly believes that the competitiveness of the EU economy is vital, and it is possible to reduce the administrative burden without undermining the EU’s policy objectives regarding the green transition.
In September 2025, we provided input to the EFRAG on its revised European Sustainability Reporting Standards (ESRS) Exposure Drafts (ED). We particularly support clearer guidance on double materiality, better structuring of connected information, and the streamlining of SFDR-related datapoints, as long as all investor-relevant indicators remain fully covered. However, we remain concerned that some simplifications risk undermining transparency and comparability.
We will continue working on any files in sustainable finance impacting pension funds.