European pension funds struggle to seek returns, doing good

For pension funds, the question of the importance to be given to client performance in relation to saving the planet has not yet been clarified. And the financial record of ESG remains controversial. So far this year, European ESG funds tracked by Bloomberg have returned 14%, or around 4 percentage points below the Stoxx Europe 600 index. US and Japanese ESG funds have also performed below their indices. comparable benchmarks.

Meanwhile, liquidity continues to flow into ESG assets. The market for environmental, social and governance investments is expected to exceed $ 50 trillion by 2025, according to Bloomberg Intelligence estimates, which would represent more than a third of total global assets under management.

The European Commission plans to ask the European Insurance and Occupational Pensions Authority to consider how best to interpret the sector’s fiduciary duty in 2022, Leppala said.

This is “an important issue that will perhaps take the fiduciary issue further than what is currently legislated,” Leppala said.

At the same time, European asset managers have had to adapt to the world’s most ambitious regulatory framework designed to keep capital away from carbon emitters. The Sustainable Finance Disclosure Regulation, which came into effect in March, requires managers to disclose how clean their portfolios are.

For the pensions sector, it is a question of defining “the question of the fundamental fiduciary obligation of a pension fund, of which we always insist on the fact of paying the pensions, even if the ESG considerations are important”, a Mr Leppala said.

“The question is therefore whether the double materiality, according to which the impact of external factors on investments and the impact of investments on external factors – outside and inside – will be integrated into the obligation. pension industry trustee, ”said Mr. Leppala.