PensionsEurope has urged the European Commission (EC) to include its ‘omnibus’ proposals in the revision of the Sustainable Finance Disclosure Regulation (SFDR), as it welcomed the initiative that aims to align EU sustainable finance regulation.

The EC adopted the omnibus package yesterday, 26 February, which aims to save over €6bn in administrative relief for businesses. The EC has a target to achieve at least a 25 per cent reduction in administrative burdens, and at least 35 per cent for SMEs until the end of the current mandate.

These first omnibus packages bring together proposals in a number of related legislative fields. They cover a far-reaching simplification in the fields of sustainable finance reporting, sustainability due diligence, EU Taxonomy, carbon border adjustment mechanism, and European investment programmes.

EC President, Ursula von der Leyen, said EU companies will benefit from “streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy”.

PensionsEurope said it would “evaluate in detail” the content of the proposal and study its consequences for the pensions sector. It stresses that transparency and good reporting by companies on their sustainability impact are important to pension funds as investors. Pension funds need comparable information to make good investment decisions. However, not all information is equally useful, therefore removing unnecessary rules and burdens for companies is necessary, the association said.

On the issue of the SFDR, PensionsEurope said that pension funds, as financial market participants, are dependent on company data to meet their own reporting requirements under the regulation.

Although the SFDR has been in force for several years, company reporting has recently been streamlined under the Corporate Sustainability Reporting Directive/European Sustainability Reporting Standards (CSRD/ESRS). Therefore, it argued that the omnibus proposal changes must be included in the revision of the SFDR to achieve the necessary harmonisation and to avoid the unnecessary burden of double reporting.

Commenting, PensionsEurope secretary general, Matti Leppälä, said: “It is a positive step that the European Commission presented its first omnibus proposal with a clear purpose to simplify and streamline different interconnected legislation on sustainable finance. Over the past years, the regulatory burden on pension funds has continuously and significantly increased due to cross-sectoral/horizontal legislation such as sustainable finance and digital agenda regulation.”

He added that occupational pension funds are important not only as financial but also as social institutions.

“In many EU countries, occupational pensions are part of the employment conditions, which are negotiated between employers, employees, and their representatives. This distinguishes pension funds’ members and beneficiaries from retail investment fund customers. Therefore, the specificities of our sector need to be understood, and it is our firm belief that proportionality always needs to be considered,” he concluded.

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