European Commission Consultation on Long-term and Sustainable Investment

The Association has submitted its response to the European Commission analysis of Long-Term and Sustainable Investment.

The consultation builds on the 2014 Communication on the long-term financing of the European Economy and complements the Capital Markets Union project, designed to facilitate cross-border investment within the EU and catalyse economic growth. The Commission hope to simultaneously boost investment across Europe, while also ensuring that it is directed in a socially and environmentally responsible manner, with a long-term perspective and respect for considerations such as human rights, public health and employee wellbeing.

Our response recognises the important effect that Environmental, Social and Governance (ESG) factors can have on investment performance, but at the same time warns that some pension funds may lack the resources to incorporate ESG considerations into their investment strategy. The effect of ESG issues on investment often only crystallises in the long-term, whereas regulatory policy sometimes encourages high portfolio turnover and a focus on short-term liquidity, making it harder for funds that want to take ESG more seriously to do so.