The Dutch pensions sector has clearly taken steps to implement the Sustainable Finance Disclosure Regulation (SFDR) and Taxonomy Regulation, according to the Netherlands Authority for the Financial Markets (AFM).

Despite this, the AFM noted that it sees the necessary points for improvement that the industry must address, partly in light of the upcoming regulations.

The Dutch Pension Federation said it recognised that work still needed to be done, but described this as “logical”.

The SFDR level 1 has applied since March 2021, while the secondary legislation (level 2) is required to be implemented from January 2023.

It prescribes detailed templates and sustainability indicators, and the Pension Federation said it was therefore understandable that pension providers have not yet set up their own detailed reporting system pending secondary legislation.

The Pension Federation stated that the sector is “shooting at a moving target” due to the phased implementation process and has difficulty in providing data on investments, because the business community is not yet required to provide the required sustainability data.

Nearly all (93 per cent) Dutch pension members are in a ‘green’ pension provider that has a pension fund with ecological or social characteristics.

Under the SFDR, pension providers must qualify the scheme as a 'grey' product (Article 6) or a product that 'promotes ecological or social characteristics' (Article 8).

The AFM questioned the fact that some pension funds participating in the IMVB Covenant have opted for Article 6, which the Pension Federation agreed was “illogical”.

The federation called on its members, especially those who have signed the IMVB Covenant, to reconsider the product classification and choice for the opt out.

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