Industry body also said it fears EIOPA’s proposed stance could lead to greenhushing

EIOPA’s efforts to reduce greenwashing should differentiate between third pillar pension products that are actively marketed by their providers and second pillar pensions that are provided as part of an employment contract or collective agreement, PensionsEurope has said.

Responding to a consultation by the European supervisory authority, PensionsEurope said it broadly supported the principles EIOPA had set out, but “we […] deplore the fact that EIOPA once again chooses a one-size-fits-all approach”.

“How a retail consumer, who is proactively discussing products with an adviser, engages with information on [a] product, is not comparable with a pension fund participant who is automatically enrolled and has no investment choice,” the European pension fund group said.

“As not-for-profit organisations with often mandatory participation and without marketing or sales that operate on the demand side of the financial market, pension funds are not involved in ‘misselling’ ESG claims to obtain an unfair competitive advantage,” the industry body said.

Its feedback on EIOPA’s proposed anti-greenwashing “opinion” is in keeping with its call – shared by other asset owner groups – for the EU’s flagship sustainable finance disclosures regulation to provide specific rules for pension funds instead of treating them like other players in the financial system such as asset managers.

Greenhushing fear

PensionsEurope also said EIOPA’s proposed definition of a “sustainability claim” went beyond the supervisory authority’s legal remit for pension funds because the information points mentioned in the definition “are beyond the scope of the IORP II Directive and therefore out of the scope of EIOPA’s competence”.

The industry body also expressed concern that EIOPA’s proposal could lead to poorer communication on sustainability by pension funds by encouraging legalistic language and discouraging visual information.

It also said it feared EIOPA’s proposed definition of a “sustainability claim” could cause pension funds to refrain from making any references to sustainability to avoid being accused of greenwashing. This is known as greenhushing, although PensionsEurope refers to greenbleaching.

EIOPA has previously said it planned to submit its final anti-greenwashing suggestions to the European Commission by May 2024. PensionsEurope said the opinion should “not in any way” end up as a stepping stone to fines for greenwashing.

“Any new legislation at the EU or national level introducing penalties in cases of non-compliance should under no circumstances be introduced,” it said.

It did, however, say that an EIOPA opinion on this topic presented some advantages compared with some national guidance (such as that in the Netherlands) and that it was positive that the draft EIOPA opinion left leeway to national supervisors regarding the implementation of its provisions.

“Given the differences between insurance undertakings and IORPs (involvement of social partners, no marketing activities, the importance of social and labor law) as well as the heterogeneity among IORPs in the EU, this leeway is necessary,” said PensionsEurope.

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