International Organisation of Pension Supervisors publishes implementation note to operationalise its ESG integration guidelines for pension funds

The International Organisation of Pension Supervisors published an implementation note to support the application of its 2019 supervisory guidelines on integrating environmental, social and governance (ESG) factors into pension fund investment and risk management. The note compiles practical examples of supervisory practices and rules from the pension sector and other financial sectors to help authorities and supervised entities implement the full set of guidelines covering investment and risk management, disclosure and ESG-inclusive scenario testing, without creating new guidelines. The note reiterates that ESG expectations should apply across all pension fund investments, not only ESG-labelled products, and that ESG and sustainability risks typically transmit through established prudential risk categories such as credit, market, operational, liquidity and reputational risk. It encourages supervisors to set and communicate clear expectations across governance, strategy, risk management, scenario analysis and disclosure, apply proportionality to reflect fund size and complexity, and focus on ESG factors that are financially material and cost-effective to manage. Supporting examples cover documentation and explain requirements when ESG is not integrated, stewardship and engagement practices, approaches to data gaps, disclosure aligned to widely used frameworks such as the former Task Force on Climate-related Financial Disclosures recommendations and International Sustainability Standards Board standards IFRS S1 and IFRS S2, and supervisory attention to misleading ESG claims and greenwashing risk.