Supervisory guidelines on the integration of ESG factors in the investment and risk management of pension funds
The IOPS supervisory guidelines propose, inter alia, that pension supervisory authorities should clarify to a pension fund governing body or the asset managers that the explicit integration of ESG factors into pension fund investment and risk management process is in line with their fiduciary duties and require that entities involved in the development and implementation of the pension fund’s investment policy integrate ESG factors, along with all substantial financial factors, into their investment strategies.
The IOPS encourages supervisory authorities to voluntarily adopt and implement the guidelines. The guidelines are non-binding and mean to provide guidance and serve as a reference point for supervisory authorities. The guidelines do not intend to induce pension funds into ESG investment. They also introduce the principle of proportionality, i.e. taking into account the size and capacities of particular pension funds, and are flexible enough to take into consideration all local circumstances.