In response to the final report from the High-level Expert Group (HLEG) on Sustainable Finance, published in late January of this year, Dutch and German pension fund representatives as well as European-wide representative association PensionsEurope warn against a “one-size-fits all” approach. The report is set to be the building block on which the EC will base its long-awaited upcoming action plan on sustainable finance. Though the final report sets out a vision for a more sustainable financial system that aligns capital with the broader values of society, BETTER FINANCE has raised several issues with the HLEG report in its current form.
PensionsEurope CEO Matti Leppälä voiced his concern with the final report, stating that due to the different ways in which pension funds invest responsibly, decisions related to sustainability should be left to the pension fund rather than prescribed by law. This is echoed by Dutch as well as German bodies in a recent IPE article. Stating that “the number of pension funds that choose to proactively invest according to ESG criteria is growing and will continue to do so”, Mr Leppälä calls for the EU to avoid a prescriptive one-size-fits all approach.
BETTER FINANCE also raised the issue in earlier communications on the HLEG report of different definitions of sustainable investments, and specifically advised the HLEG to avoid using ESG-specific benchmarks with individual investors. BETTER FINANCE has previously welcomed the efforts of the HLEG on Sustainable Finance as a step in the right direction, though stating its disappointment with the lack of attention paid to information and governance issues for sustainable finance products.
Specifically, BETTER FINANCE sees the failure of the HLEG to include any reference to the most basic of requirements for sustainable finance - i.e. fair, transparent, clear and non-misleading investor information - as particularly unfortunate since the organisation has publicly stressed this issue and had been heard by the group upon its request.
To learn more about BF`s position and its response to the HLEG interim report in July 2017, please see here.