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The two-part analysis will involve a qualitative assessment of how occupational pension funds incorporate environmental, social and corporate governance (ESG) factors into their processes and assess the exposures of their investment portfolio, the spokeswoman said.
This will be complemented by a quantitative exercise, with a focus on identifying business activities that are prone to being exposed to risks related to a transition to a low-carbon environment.
Speaking about the stress tests at a conference in Brussels, Matti Leppälä, CEO of PensionsEurope, said the qualitative ESG-related section would include questions about pension funds’ policies, for example in relation to voting and engagement, and the impact of the Shareholder Voting Rights Directive on pension funds.
The quantitative part would involve asking pension funds how much of their portfolio is exposed to the most emissions-intensive business sectors, he said.
Leppälä said EIOPA was engaging with stakeholders such as PensionsEurope and emphasised that the plan for the stress test had not yet been adopted.
The EIOPA spokeswoman said the supervisory authority was taking “its first steps to get a more tangible understanding of IORPs’ exposure to ESG”.