• Insights

Recent developments in
ESG and pensions

European Union
The main provisions of the EU's Sustainable Finance Disclosure Regulation have been in force since 2021, but compliance remains a challenge for many market participants. Here is an update on the state of play.

Over the past six months, the European Sustainable Finance Disclosure Regulation (SFDR) has continued to shape the landscape of sustainable finance in Europe, with noteworthy developments specifically impacting the realm of pensions. As Europe’s commitment to ESG integration deepens, let’s delve into some of the latest advancements and trends within the SFDR framework as it pertains to occupational pensions.

1. Disclosure requirements under the SFDR

The SFDR contains harmonised disclosure requirements for financial market participants, including pension funds, relating to the sustainability of investments. Information is required to be to be disclosed on websites, pre-contractually and in periodic reports. The precise disclosure requirements depend on the financial products that are being offered and whether they are being promoted as sustainable or green.

2. Implementation challenges are being addressed

The initial stages of SFDR implementation saw many market participants grappling with interpreting and complying with the regulation’s requirements. In response, the three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs), have been working to provide clarifications and guidance to facilitate smoother implementation. This has provided pension funds with more concrete steps and methodologies for effectively integrating sustainability considerations into their investment strategies.

3. Enhanced reporting and disclosure

The SFDR’s reporting obligations have been an area of focused attention. In recent months, pension funds are starting to embrace the opportunity to demonstrate their commitment to sustainability by providing detailed disclosures about their ESG policies and practices, following the entry into force of the SFDR’s Regulatory Technical Standards (RTS). This shift is indicative of a broader trend towards greater transparency within the pension sector, fostering accountability and enabling beneficiaries to make informed decisions aligned with their values.

4. Ongoing dialogue and collaboration

Recognizing the complexity of implementing the SFDR in the pension context, industry stakeholders have been engaging in discussions and collaborations to share best practices and insights, often facilitated by the national or European supervising authorities. Asset managers, pension fund administrators and regulatory bodies have been actively participating in workshops, forums and public consultations aimed at addressing challenges and identifying opportunities for effective ESG integration.

5. Focus on Regulatory Technical Standards

The Regulatory Technical Standards (RTS) under the SFDR, which came into force on 1 January  2023, have remained in the spotlight, with ongoing evaluations of their effectiveness. Some experts have called for a review of the RTS to ensure they strike the right balance between providing clear guidance and allowing flexibility for different investment strategies. As pension funds continue to navigate the complexities of these standards, feedback from the industry will likely play a role in shaping potential adjustments.


The last six months have seen significant strides towards the integration of the SFDR framework within the realm of occupational pensions. As regulatory clarity increases, reporting practices evolve and ESG integration gains traction, Europe’s pension sector is gradually moving towards a more sustainable future. While challenges remain, the collaborative efforts of industry participants, regulators, and stakeholders continue to pave the way for a financial landscape that embraces transparency, accountability, and environmental and social responsibility.

Find out how ESG issues are shaping policy and practice in other areas of employment law

Cédric Bruyninckx
Associate - Belgium
Claeys & Engels