PRESS RELEASE
PensionsEurope calls for IORP-specific approach in SFDR review
Brussels, 5 March 2026
PensionsEurope today published its position paper on the review of the Sustainable Finance Disclosure Regulation (SFDR), welcoming the European Commission’s objectives of simplification, greater clarity for investors, and stronger safeguards against greenwashing. However, it warns that the proposed product categorisation framework risks creating a structural misfit for occupational pension funds.
Unlike retail investment products, occupational pension institutions operate as long-term institutional investors with liability-driven strategies and fiduciary duties to pension savers. Applying a uniform categorisation framework designed for retail financial products to IORPs could therefore produce misleading outcomes and disproportionate compliance burdens.
PensionsEurope therefore calls for Member States to retain the possibility to exempt IORPs from mandatory SFDR categorisation. If IORPs remain within the scope of the categorisation framework, we stress that a dedicated regulatory technical standard (RTS) tailored to occupational pensions would be essential. Such an approach would better reflect collective pension structures, liability-driven investment strategies, and the prudent person principle under the IORP II Directive.
Key technical recommendations
- Government bonds: These should either be excluded from alignment calculations or treated under a realistic methodology that reflects their essential role in liability matching, liquidity management, and portfolio risk management.
- Alignment thresholds: The proposed 70% sustainability alignment threshold should not be applied twice at both the fund and product levels, as this would make compliance unrealistic for diversified long-term portfolios.
- Member communication: Pension funds should continue to be able to communicate sustainability-related information to members through existing channels such as websites, contractual documentation, and member newsletters.
- ESG data supervision: Supervisory approaches should recognise persistent ESG data gaps, particularly in private markets and sovereign exposures, while encouraging greater transparency and accountability from external ESG data providers.
- Regulatory consistency: The SFDR framework should avoid duplicating requirements already addressed under the IORP II framework and remain aligned with other EU sustainability legislation, including the CSRD and ESRS as well as the broader EU Omnibus simplification initiative.
PensionsEurope believes these adjustments would lead to a well-calibrated sustainable finance framework that allows pension funds to continue supporting the green transition while maintaining prudent risk management and protecting pension savers.
“A well-functioning sustainable finance framework must recognise the specific role of occupational pensions,” said Matti Leppälä, CEO of PensionsEurope. “IORPs invest over very long horizons and manage diversified portfolios to meet future pension liabilities. A retail-style categorisation system does not reflect this reality and risks excluding many pension funds from sustainability categories despite their significant contribution to financing the transition.”
The full position paper is available here
