Dutch pension funds must speed up the implementation of the Sustainable Finance Disclosure Regulation (SFDR), according to financial market regulator AFM. But for the time being, compliance will not yet rigidly be enforced, said AFM director Laura van Geest.
“The pension sector is less far in implementing the SFDR than the asset management sector since many pension funds have chosen to [temporarily] opt-out of the SFDR,” Van Geest said, speaking at the annual congress of trade publication Pensioen Pro.
Most of the funds that opted out have done so because they believe there is still too much uncertainty about the implementation of the SFDR.
The AFM director called on pension funds to now “take the lead”. She said: “Don’t see sustainability as a complex challenge but as a strategic tool to leverage engagement and trust of your members.”
Van Geest added the regulator has been patient with pension funds because many practical questions around the implementation of the regulation remain.
“While some regulators in other countries started interpreting the SFDR themselves already, at AFM we decided to wait for clarity from Brussels first. As a consequence, we have spent almost three quarters of a year answering your questions about the SFDR. But at some point, the time of talking is over. Now it’s time to really get to work,” she said, addressing pension fund executives directly at the congress.
“I don’t want to sound unfriendly, but we hope the pension sector will now embrace the ideas behind the SFDR. I think you can take it up a notch,” she added.
But pension funds need not worry directly. “As long as the regulation has not yet completely crystallised, we will not enforce with an axe in our hand,” van Geest said.
“Next year we will check whether funds have learned from our feedback. Only then, we will resort to strict enforcement.”