PensionsEurope publishes position paper on Sustainable Finance

Today PensionsEurope published a position paper on the legislative package on sustainable finance .Specifically, it comments on:

  • A proposal for a regulation establishing a unified EU classification system of sustainable economic activities COM(2018) 353.
  • Proposal for a regulation on disclosures relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341 COM(2018) 354.
  • Proposal for a regulation amending Regulation (EU) 2016/1011 on low carbon benchmarks and positive carbon impact benchmarks COM(2018) 355.

PensionsEurope welcomes the EU’s initiatives in the area of sustainable finance. Pension funds are long-term investors that aim to deliver adequate pensions for their members and beneficiaries at low costs. This means they naturally take the long view and are required to consider the long-term risks that may affect their portfolios. Moreover, pension funds increasingly align their investment practices with the values of their membership and increasingly society at large. The proposals will support this effort by increasing the transparency of sustainable investments.

At the same time, regulatory intervention needs to take account of pension funds’ primary role of providing a retirement good income to their members and beneficiaries. The fact that the EU is taking a comprehensive approach including all sectors of the financial system does not mean that this should lead to a uniform regulatory approach. It is therefore not necessary to employ prescriptive legislative tools such as delegated acts. Pension funds are covered by a principle-based minimum harmonisation framework where Member States retain sufficient flexibility to adjust the rules to their domestic pension systems, as well as social and labour law. Moreover, the IORP2 Directive is still under implementation. From a ‘better regulation’ standpoint, it would be best to assess how the new ESG provisions are transposed and put into practice, before amending them.

The position paper can be found here.