Some eventful months have gone by since our last newsletter and it is always with pleasure that we look at how much sustainability issues and sustainable finance are gaining group day by day in Europe and abroad. Last July, the European Parliament voted in favour of creating a label for social enterprises. The 77% majority gives a good signal that Europe is ready to grant a statute for social and solidarity-based enterprises. The vote came after the European Parliament Committee on Legal Affairs and the Committee on Employment and Social Affairs adopted a motion in support of the set-up of a label specifically focusing on identifying Social Economy actors in Europe. The purpose of this label would be to identify good practices and standards for social enterprises. The member of the European Parliament who has been leading the process, Jiří Maštálka, (from the far-left Confederal Group of the European United Left – Nordic Green Left GUE/NGL) has been the rapporteur supporting this process since 2017 when the issue of a proposal for an EU definition for these actors was still under discussion. Original plans around the proposal for a legal definition at European level had soon been abandoned in view of the different legislation existing in every member state. A label would instead allow relevant players identify themselves when applying for funding. Last October, the Committee on Legal Affairs at the European Parliament had already delivered a draft report which contained clear recommendations for the Commission in favour of a Statute for social and solidarity-based enterprises.
Previous European Parliament positions included earlier resolutions, like the one in 2015 on ‘Social Entrepreneurship and Social Innovation in combating unemployment’, which called for creating the necessary framework conditions for a system of social innovation, facilitating access to public procurement, and improving access to funding. Back in 2013, with a resolution on the ‘Contribution of cooperatives to overcoming the crisis’, the Parliament pointed out the resilience of this type of enterprises in face of the fluctuations of the economic cycle and their critical role in integrating disadvantaged workers. It was still back in 2013 that the European Parliament had also supported the establishment of EU-level legal forms for social economy actors in its resolutions on the Statute for a European mutual society, on the Statute for a European Foundation of 2013 and on the Statute for a European Cooperative Society with regard to the involvement of employees of 2012. This was certainly a very positive achievement, good for the industry and the economy and one that I have been personally encouraging also as member of the High-Level Expert Group (HLEG), where in the final report we highlighted how a label that can act as ‘identifier for social enterprises in the euro area’, leading for official recognition of the social economy and social enterprise, could help empower these players.
Also this summer, the European Supervisory body, the European Insurance and Occupational Pensions Authority, EIOPA, announced the appointment of its latest Stakeholders Groups composition. As part of the regulation for the establishment of a European Supervisory Authority (European Insurance and Occupational Pensions Authority) Stakeholder Groups, dating back to 2010, both Parliament and Council have established that the role of these groups would be to “help facilitate consultation with stakeholders in the areas relevant to the tasks of the Authority”. Both the Insurance and Reinsurance Stakeholder Group and the Occupational Pensions Stakeholder Group are tasked with “submitting opinions and advice to the Authority on any issue related to the tasks of the Authority”.
The mandate of the past Occupational Pensions Stakeholder Group (OPSG), which ended earlier this year, included a set of subgroups that specifically looked at: Occupational pensions, Consumer Protection and Personal Pensions. The topic of sustainable finance will be certainly featuring prominently this mandate and hopefully, the topic will be included across all the sub-groups. Eurosif has been selected to participate in the Occupational Pensions Stakeholder Group along with other players much involved in the topic of sustainable finance, investments and pensions. Eurosif has worked very closely with EIOPA in the past two years to drive forward issues around ESG transparency and sustainable finance. We hope this will be another worthy opportunity for the European institutions to bring more focus on sustainable finance getting strong alignment from all the players in the industry. On the 17th of October, the OPSG had its first meeting in Frankfurt, to determine the governance and structure of the sub-committees and their work for the next two and a half years.
Always regarding pension, in September we witnessed the latest and positive news around the European project in support of a framework on personal pensions, known as PEPP, which makes up for the fragmentation of the personal pension market, the limitations both in terms of choice and attractiveness of products, along with the increased costs for pension savers. The EU’s Economic and Monetary Affairs committee has approved a draft rulebook for the planned pan-European personal pension product (PEPP), including consumer protection and sustainable investment requirements. This step can be considered a rather positive conclusion in a very interesting European policy chapter. The market fragmentation, which characterises the pension market in the EU today, has hampered diversification, innovation and economies of scale, while contributing to higher costs and a lack of liquidity in the capital markets. Against this backdrop the European Commission’s 2012 pensions White Paper called for more opportunities for citizens to be able to save in safe and good value complementary funded pensions. The PEPP has the potential to foster the development of a large and competitive European market for personal pensions. The willingness of the European Commission to encourage a stable, sustainable and growing economy, certainly entails a healthy pension system which savers can trust, that allows them to continue spending through their retirement years and which does deliver its promised benefits. The delicate equilibrium between spending and consumption is an important element of a healthy economy, especially while we are faced with increasing longevity. PEPP means that individual savers and providers will both profit from an enlarged, more transparent and more competitive market. The work of the European Parliament and the positive vote indicates good results in terms of improving product’s specifications, enhancing transparency and therefore improving consumer protection. Sophia in ‘t Veld, the Dutch MEP for the Liberal Democrats in Europe and rapporteur for PEPP, was very positive about the work achieved so far and the result. The regulation includes specific parameters for sustainable investing and targets in line with the Paris Agreement and the UN Sustainable Development Goals. The role played by EIOPA has been and will continue to be instrumental to the work around PEPP, both in guaranteeing consumers’ protection and the quality of the framework and of all PEPPs. Though issues such as the fiscal treatment still remain pending, the Parliament offered two valid options to Member States, to either opt for a local understanding of PEPP also in terms of rights or develop a European fiscal regime. Over the next months, Parliament and Council will be exchanging on how to combine their perspectives in view of the final vote.
Eurosif Executive Director