AEIP calls for a more tailored SFDR framework for occupational pension funds
The European Association of Paritarian Institutions (AEIP) today has published its position paper on the review of the Sustainable Finance Disclosure Regulation (SFDR).
In our report, we welcome the European Commission’s proposed simplification approach aimed at establishing a precise categorisation system for sustainability-related product disclosures, including clear minimum conditions, as well as the proposed removal of mandatory reporting of Principle Adverse Impact (PAI) indicators.
At the same time, AEIP underlines the need for a separate treatment for IORPs and occupational pension schemes compared to typical retail investment products. Occupational pensions are generally not distributed through a contractual process involving an active investment decision by prospective members. Participation is often mandatory or quasi-mandatory, and linked to employment arrangements, meaning that prospective members typically do not choose between competing pension schemes. In addition, IORPs are long-term institutional investors managing well-diversified portfolios based on their members’ retirement objectives, risk management considerations and long-term investment strategies. In light of the specific characteristics, AEIP calls for a more tailored and proportionate approach, with more appropriate communication and sustainability-related disclosures for IORPs’ members and beneficiaries.
AEIP also cautions against the proposed restrictive rules on naming and marketing communications, which could unduly prevent financial market participants from making sustainability-related claims regarding their investments. We urge greater clarity as to whether financial market participants, such as pension funds, whose products could fall under the ESG Basics category, and allocate a significant amount of their investment portfolio in transition, sustainability and impact-related objectives would still be able to communicate about such investments in a clear, fair and non-misleading manner.
To read our position paper, please see here.