The EU pension fund supervisor’s analysis would also consider the potential need to broaden the concept of “the long-term best interests of members and beneficiaries,” states an overview of the draft strategy seen by IPE.

“The aim would be to ensure that the framework better reflects members’ and beneficiaries’ sustainability preferences and broader societal and environmental goals,” said the Commission.

“More broadly, in collaboration with the [European Supervisory Authorities], the Commission will consider and assess further environmental measures to enable all relevant financial market participants and advisers to consider sustainability impacts of their investment decisions on a systematic basis,” it added.

The draft EC documents also refered to the EIOPA analysis being to “assess whether the prudent person rule should be clarified and/or explore possible avenues to require the integration of sustainability impacts in investment decision”.

Double materiality captures the notion of environmental, social and governance (ESG) factors affecting investment as well as being affected by investment.

In the EC’s words: ”The concept of double materiality consists of the systematic integration of both outside-in and inside-out ESG risks by financial actors across financial decision-making processes.”

EIOPA has previously floated a change to the EU pension fund legislation, IORP II, to mandate pension funds to take into account the long-term environmental and/or social impact of their investment decisions.

Supporting transition finance

Publication of the official new sustainable finance strategy, a follow-up of the 2018 action plan, is anticipated for 6 July.

In the leaked draft communication, the EC said a complementary strategy to the 2018 plan is needed because all the actions laid out then had not yet been delivered, and “our understanding of what is needed to meet the sustainability goals has evolved, and the global context has changed”....

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