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Europe's pension funds still don't know how to treat a key risk

The main organization representing European pension funds says it's still not clear how the industry should balance financial returns against a desire to do more environmental and social investing.

The European Commission is planning to ask the European Insurance and Occupational Pensions Authority (EIOPA) to look into how best to interpret the industry's fiduciary duty in 2022, according to Matti Leppälä secretary general of Brussels-based Pensions Europe | Photo: Yves Herman/REUTERS / X00380

The lack of clarity means pension investors representing about USD 5trn may be putting less cash than they otherwise might into sustainable assets. That's as the need for a decisive reallocation of capital toward planet-saving goals grows more urgent as global warming becomes increasingly deadly.

For now, "pension funds in Europe have a legal duty to invest in the long-term best interest of beneficiaries," said Matti Leppälä  secretary general of Brussels-based Pensions Europe.

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