AEIP suggests that a thorough Sustainable Finance Disclosure Regulation (SFDR) review is needed to make rules fit for pension funds
The European Association of Paritarian Institutions (AEIP) has submitted its feedback to the European Commission’s consultation on rationalisation of reporting requirements. AEIP fully supports the Commission’s ambition of improving transparency in financial markets regarding sustainability.
To best achieve this ambition, we suggest that a significant revision of the Sustainable Finance Disclosure Regulation (SFDR) is required. Significantly our members observe that currently the SFDR is not used as a disclosure framework as intended, but as a labelling and marketing tool (precisely Articles 8 and 9). Important concepts such as the ‘sustainable investment’, are not clearly defined, data gaps exist, and there are significant costs and reporting requirements. Therefore, in our input we suggest removing Article 8 and 9, and we support a categorisation system (if established), that can split categories in a different way than according to existing concepts used in Articles 8 and 9.
Recognizing the inherent distinctions between paritarian institutions, such as occupational pension and healthcare funds, and pure financial market entities is crucial. Unlike retail clients who actively choose investment products, pension plan members and beneficiaries are not “customers”; they are automatically enrolled based on their employment relationship, making their engagement with information markedly different. As the SFDR is primarily designed for a pre-contractual phase, where information can be regularly checked, it does not align well with the unique dynamics of pension plan participants.
AEIP strongly supports the aim of the Commission to further enhance the financing of the transition to a more sustainable economy. Currently there is a substantial amount of legislation concerning sustainability, and the framework undergoes continuous modifications.
Simone Miotto, the Executive Director of AEIP said:
We suggest that the way forward is to shift away from the horizontal approach, to realise the specificities of the different types of investors and respect that IORPs are not pure financial institutions.
To read our full feedback see here.
For further information please contact: panayiotis.elia@aeip.net