European pensions sector fails to use clout in green finance policymaking

A UK-based think tank said the European pension sector, with notable exceptions, is failing to use its influence to direct EU and UK sustainable finance policymaking – even though many pension funds are leading efforts to make the companies they own more climate-friendly.

The conclusion comes in a report out today mapping the sustainable finance policy engagement of the 25 largest pension funds in Europe – which had total assets of more than $3.4trn in 2020 – as well as 10 national pension fund associations and PensionsEurope.

Paula Castro, senior analyst at InfluenceMap, said: “While some of Europe’s pension funds are clearly trying to take the threat of climate change seriously, most are not actively engaged on emerging sustainable finance policy.”

This pointed to a potential blind spot for the industry, she said.

“It means that industry associations – which often take a more negative approach to policy – are the loudest voices at an EU level,” said Castro.

The enormous amounts of money invested in pension funds meant they had significant influence when it came to “pulling levers to address the climate crisis”, the analyst said.

The report’s authors said four pension funds stood out as  more positive advocates for ambitious sustainable finance policies. They were Norway’s sovereign wealth fund manager Norges Bank Investment Management, Dutch fund Pensioenfonds Metaal en Techniek (PMT), and the UK’s Universities Superannuation Scheme (USS) and BT Pension Scheme (BTPS).

Among pensions industry associations, InfluenceMap said the Pensions and Lifetime Savings Association in the UK shone as the most supportive in this regard.

“Negative policy engagement appears to be more common in pensions industry associations with a higher proportion of real economy corporate pension fund members,” InfluenceMap said.

As examples of that, it said Germany’s Aba had corporate board members including BASF, Bayer, Bosch, and Volkswagen, among several pension funds, and ExxonMobil, Unilever, Nokia, and Shell’s pension funds were among members of the Belgian pensions lobby group PensioPlus.

“Both these associations have opposed an ambitious approach to the EU’s proposed policies on sustainable finance, such as the Sustainable Finance Disclosure Regulation,” the NGO said.

In its report, InfluenceMap contrasted the general picture regarding pension funds’ efforts to lobby sustainable finance policy creation with their efforts to steer portfolio companies in a climate-friendly direction.

”Many pension funds have taken action on climate through their asset management and stewardship duties,” the think tank said, and included examples of what it termed leading practice on climate, singling out action taken by PME, ABP and PFZW in the Netherlands, Varma in Finland, AP7 in Sweden as well as USS and BTPS.

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