Ethical investing has been strengthened by the European Parliament's economic and monetary affairs (ECON) committee, which approved the Institutions for Occupational Retirement Provision (IORP) II Directive by 47 to three votes.
The IORP II Directive has divided the UK pension industry with some saying it will improve governance standards while others have said it will create too much red tape.
In November 2014 UK trustees attacked plans to introduce a standardised member benefit statement across Europe as it would needlessly increase costs for members.
However other groups like ShareAction have welcomed the legislation and recent vote.
Senior policy officer Camilla de Ste Croix said: "The ECON Committee's vote shows that the debate on responsible investment in the EU is shifting in the right direction. By voting in favour of measures to mandate the consideration of environmental risks in pension schemes' investment processes, MEPs have shown they recognise the very real risks that environmental issues can pose to investment portfolios."
With €2.5trn (£1.9trn) held by European occupational schemes, the investment behaviour of these funds was crucial to the successful transition to the low-carbon economy, she added.
ShareAction also said it was critical the text was not watered down as it passed through the final stages of the legislative process.
PensionsEurope chairman Janwillem Bouma added: "The IORP II is about better governance and disclosure, it is important to take into account different types of pension schemes, as well as the role social partners have and the differences in social and labour law. In ECON Committees' report there is a welcome consensus on the recognition of the social purpose of IORPs and on simplifying the pension benefit statement. We look forward to continue engaging with the [European] Commission, [European] Council and [European] Parliament to secure a good outcome for IORPs."
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