In January 2018, the High-Level Expert Group (HLEG) on Sustainable Finance delivered a set of recommendations on how to align the financial system with the broader values of society. The European Commission followed up with an Action Plan in March 2018.
Over the last years, there has been a clear trend in the pensions sector towards responsible investments. PensionsEurope therefore welcomes the Action Plan, as it contains many recommendations that will improve the scope of sustainable investments and expand the amount of information available to institutional investors on environmental, social and governance (ESG) aspects of investments.
In July 2021, the EC published the new Sustainable Finance strategy. The new strategy is calling for the publication of a brown taxonomy and a social taxonomy. While a brown taxonomy would provide further indications concerning environmental risks, its development might produce negative consequences, especially if not complemented by consistent indicators promoting the greening of enterprises. In addition to respecting human rights businesses, social taxonomy can promote the right to an adequate standard of living through related goods and services.
Moreover, PensionsEurope recognises the need to create consistency between the Taxonomy Regulation and the Sustainable Finance Disclosure Regulation (SFDR) on the one hand and the Corporate Sustainability Reporting Directive and the future sustainable reporting standards on the other.
We have been active as well on the Corporate Sustainability Due Diligence Directive (CSDDD) published in February 2022 by the EC. The proposal has a 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.
The review of the SFDR both at level 1 was launched by the EC end of 2023 and at level 2 (review of PAI and financial product disclosures in the SFDR Delegated Regulation) is also a matter of priority for PensionsEurope. We answered both the ESA’s consultation on the level 2 review which was held over the summer of 2023 and the EC’s consultation regarding the level 1 review which ended on 15 December 2023.
In our answer to the EC, we highlight the issues of the implementation of the SFDR for pension funds. Furthermore, we also advocate for sub-sectorals RTS for IORPs within the SFDR. PensionsEurope also encourages the development of an EU-level categorisation system for financial products based on sustainability criteria.
Finally, PensionsEurope is also active on the ESG ratings EC’s proposal published in June 2023. We indicate among other issues that the regulation should extend to ESG data itself.