Matti Leppäla, chief executive officer of PensionsEurope, said he was worried that EU regulation around responsible investment for pension funds was moving too fast without first allowing time to see how rules works in practice.
The leader of the cross-European pensions industry association told the IPE Summer Pensions Congress 2020 this morning: “One concern is that this is moving so rapidly, this regulatory framework and policies.”
Leppäla said PensionsEurope was submitting its response today to the European Commission’s consultation on its renewed sustainable finance strategy – which builds on the 2018 action plan on financing sustainable growth, and is meant to provide a roadmap for increasing private investment in green projects.
That consultation closes today.
“For pension funds, we have just recently had the new IORP II directive, which has very far-reaching requirements in ESG issues in governance risk management – and also in allowing pension funds to take ESG into account in their investments,” Leppäla said in a video panel discussion.
“We would like to see how that actually works before the regulation is taken further,” the CEO said.
However, Leppäla said he thought the renewed strategy would go forward and said there was a great need for it, moving as it did from the original environmental objectives towards social objectives as well as the issue of whether there should be a “brown taxonomy” as well as a green taxonomy.
“Brown taxonomy” describes a report on the provisions required for extending the requirements of the EU Taxonomy Regulation to activities that do significantly harm environmental sustainability.
PensionEurope did have many concerns about this particular element of the strategy, Leppäla said.
“If you start blacklisting sectors and companies, increasingly you make the transformation to more environmentally-friendly or social enterprises more difficult,” he added.
Investors could make a bigger difference in contributing to the green transition by investing in companies changing their emissions levels rather than divesting, he said.