PensionsEurope wants EU policymakers to agree on a single set of ESG indicators that can be used across the bloc’s regulatory regime.
The request was made in response to a discussion paper published by the European Insurance and Occupational Pensions Authority (EIOPA), on measures to support integrated data collection.
Under the amended Solvency II Directive, EIOPA has been mandated to submit a report to the European Commission on potential interventions on reporting and disclosure, and the discussion paper is part of its consultation with the market.
PensionsEurope expressed alarm at EIOPA’s suggestion that occupational pension funds, or IORPs, should be covered by the same rules, despite the fact that they aren’t in scope of Solvency II.
“Solvency II is not an appropriate legal basis for extending reporting requirements to pension funds operating under the distinct IORP II framework,” it argued, adding that “occupational pensions deserve an assessment based on their own regulatory framework, rather than being tied to Solvency II reporting deadlines”.
In its response, it said many of EIOPA’s suggestions were “unsuited to occupational pensions” and would introduce unnecessary costs and working hours.
“There is a clear divergence between the direction implied by the discussion paper and the stated EU objective of a 25% reduction in administrative burden,” PensionsEurope pointed out, referring to the Commission’s promise to cut red tape by a quarter during its current term.
In order to fulfil the commitment to lighten the regulatory load, the body said the EU should instead focus on avoiding duplicative disclosure requirements across different frameworks.
“Establishing a core ESG datapoint set with definitions and calculation rules reused across frameworks could also be helpful,” PensionsEurope suggested, noting that this was particularly important for the alignment of the Sustainable Financial Disclosure Regulation (SFDR), IORP II and national sustainability requirements.
The current fragmented approach “creates significant operational complexity, especially where IORPs rely on asset managers for ESG data that must then be reformatted for different reporting frameworks”, it wrote.
The response also argued that ESG data requests are often made too granular, going “beyond what is operationally usable for IORPs’ risk management, particularly for collective and long-term strategies”.
“A more principle-based approach, focused on materiality and proportionality, would better support effective sustainability risk management,” PensionsEurope suggested.
The European Association of Paritarian Institutions made similar remarks in its response to EIOPA, highlighting “inconsistencies between ESG-related reporting obligations, particularly those arising from the SFDR and the IORP II Directive”.
“In this context, we call on EU policymakers and regulators to improve the alignment of the two regulatory frameworks and provide greater clarity regarding their objectives in the context of the ongoing legislative revision,” it stated.
