Sustainable finance policy a ‘blind spot’ for European pension funds

According to the climate think tank InfluenceMap, some of the largest European pension funds are not actively involved in the emerging sustainable financial policy at the EU level.

As reported by our sister publication, European pensionsThe research, which included 25 of Europe’s largest pension funds and 10 national pension fund associations, found that only four of the 25 funds and five of the 10 associations showed a “meaningful commitment” to sustainable finance policies.

InfluenceMap explained that these results pointed to a potential “blind spot” for the industry, which has shown increasing climate awareness in how companies manage their investment portfolios.

She added that her “relative silence” on climate-related fiscal policy developments is being filled by financial industry associations, some of which have “strongly pushed back” the EU’s sustainable finance proposals.

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Norway’s Norges Bank Investment Management, Dutch fund Pensioenfonds Metaal en Techniek and UK-based schemes Universities Superannuation Scheme and BT Pension Scheme were identified as the more positive advocates of ambitious sustainable fiscal policies.

The Pensions and Lifetime Savings Association (PLSA) stood out as the most supportive of the associations, while PensionsEurope was singled out as one of the most committed bodies, communicating high-level support for many sustainable finance policies in Europe, despite being “cautious against” a prescriptive approach to regulatory intervention.

The InfluenceMaps report found that negative political engagement appears to be more common in pension industry associations with a higher proportion of occupational pension fund members in the real economy.

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“While some of Europe’s pension funds are clearly trying to take the climate change threat seriously, most are not actively engaged in developing sustainable fiscal policies,” said Paula Castro, senior analyst at InfluenceMap.

“This points to a potential blind spot for the industry. This means that industry associations – which often have a more negative attitude towards politics – are the loudest voices at EU level.

“Given the massive amounts of money being invested in pension funds, these organizations have significant leverage when it comes to leveraging the climate crisis.”

Tony Burdon, CEO of Make My Money Matter, added: “This is the first comprehensive review of Europe’s largest pension schemes and their associations and their zero-cost policies.

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“And while it is encouraging to see good leadership in the UK, the overall picture painted is not good enough if we are to tackle the climate emergency and the risks to the savings of millions of people in the UK and Europe.

“Therefore, our governments must regulate for a net-zero financial sector and a broader economy to limit warming to 1.5C. That’s why pension funds need to respond to the millions of members who want their money to fight, not create, the climate emergency.”