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Pension Schemes and SFDR Requirements

The Sustainable Finance Disclosure Regulation was introduced in 2019. Most of its requirements came into force in March 2021 which are also known as “Level 1” requirements. They relate specifically to prospectus updates, website disclosures and updating and preparing sustainability risk policies.

The Regulatory Technical Standards, or Level 2 requirements, came into force on 1 January of this year. These requirements are more detailed and technical and are intended to supplement the Level 1 requirements. Our Pensions team takes a closer look at some these new requirements and their implications for pension trustees in Ireland.

In recent years, the EU has been focusing on strengthening sustainable finance regulation as well as recognising the role the financial sector plays in achieving the EU’s sustainable development objectives. To build on these goals, the European Commission has developed a Sustainable Finance Action Plan and as part of that plan, it published the Sustainable Finance Disclosure Regulation (SFDR) in 2019.

SFDR applies to financial market participants (FMPs), and pension schemes are captured by the FMP definition.


The SFDR Level 1 requirements are high-level principles-based disclosure requirements. They include prospectus updates and maintaining website disclosures, as well as updating and preparing sustainability risk policies.

However, the Level 2 requirements have introduced more detailed, technical requirements, including pre-contractual and annual reporting disclosures. These disclosures must be set out on a specific template in the annexes for relevant products. The templates can be found here.

FMPs are also required to complete an “adverse sustainability impacts statement” which must be published on the FMP’s website by 30 June each year. For pension schemes this will involve the impact of its trustees’ investment decisions on sustainability.

To assist market participants to comply with SFDR requirements, The Central Bank issued a paper on a streamlined filing process for SFDR disclosures in October 2022. A Gatekeeper Review followed in November 2022 which highlighted the main disclosure issues encountered and outlined risks that the CBI had observed in terms of potential greenwashing or areas where there has been a lack of transparency or clarity.

Pension trustees

SFDR applies to pension schemes and pension trustees must comply with its requirements. Some of the main trustee obligations under SFDR include:

  • Developing and disclosing a policy around the integration of sustainability risks into the investment decision making process
  • Ensuring that trustee and other remuneration policies disclose how that remuneration policy integrates sustainability risks
  • Preparation of an adverse sustainability impacts statement
  • Pre-contractual risk disclosures: description of the manner in which sustainability risks are integrated into investment decisions and the likely impact of this on returns. Alternatively, providing an explanation as to why sustainability risks are not relevant


Most of the SFDR requirements have already been in place since March 2021. With the remaining requirements taking effect from January of this year, market participants, including pension scheme trustees, must prepare to comply with the strict technical standards in the Level 2 requirements. The first deadline to note is the 30 June, which is the final date to report on adverse sustainability impacts of investment decisions made during the last calendar year.

For more information on SFDR and pension schemes, contact a member of our Pensions team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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