Proposed changes by De Nederlandsche Bank (DNB) to Dutch pension fund environmental, social and governance (ESG) reporting statements “offer no added value” and “completely misses the target”, according to the Dutch Federation of Pension Funds (Pensioenfederatie).

As a result, it is requesting that DNB reconsider or thoroughly revise the draft ESG statements. DNB has proposed amending the Pension Funds Reporting Statement Regulations 2015 to introduce two new Financial Assessment Framework (FTK) report statements, to be requested on an annual basis.

“These two report statements aim to obtain more information on ESG characteristics of pension funds' investment portfolios,” DNB said.

While the federation acknowledged that mapping climate and environmental risks is valuable in itself, it takes issue with the current proposal by DNB.

“The proposed approach is unclear and does not tie in well with the practice of pension funds. In addition, the approach is not proportionate and leads to unnecessary national overlay of European legislation. In our opinion, there are more targeted and efficient ways available to measure and monitor climate-related risks. In our opinion, the costs of this additional data request from pension funds do not outweigh the benefits,” DNB stated.

One of its most “pressing concerns” relates to the increase in administrative burden. It argues that the increased reporting is disproportionate to the added value that it creates.

“For example, much data is not (yet) available or is expensive to purchase. Pension funds need to deploy and/or buy in additional capacity for the new reporting requirements. The new requirements will not lead to substantially more insight. Pension funds that already make information available under European Sustainable Finance Disclosure Regulation (SFDR) regulations will experience the new requirements as unnecessary ‘national headlines’ on European legislation,” it stated.

It also stressed that smaller pension funds will be hit harder, as they have limited capacity. The federation fears that the increase administrative costs will “come at the expense of ambitious sustainability policies and their implementation”.

Another concern is the alignment of the proposed changes with existing laws and regulations, such as SFDR and the European Taxonomy. The federation believes the proposed ESG statements “do not seem to align or overlap with this, leading to additional obligations and increased complexity”.

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