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Comments on sustainability taxonomy published

Insurance Europe has today published a position paper outlining its views on EU proposals for a sustainability taxonomy, in view of current trilogue discussions between the European institutions.

Some key messages include:

Scope — Insurers support the focus of the European Commission and the Council of the EU on financial products marketed as environmentally sustainable. The European Parliament’s proposal to extend the scope to other financial products is premature and risks creating feasibility and proportionality issues.

Encouragement of the transition to a sustainable economy — Insurers support a EU taxonomy that is able to fully encourage the transitional process to sustainability and to capture a forward-looking element. Therefore, the Council proposal to recognise enabling and transition activities as potentially contributing to sustainability is welcome. This approach will encourage all sectors to make their business models more sustainable and will not unnecessarily restrict the investment universe.

Disclosure requirements — Given that insurers have large and diversified investment portfolios, performing the sustainability assessment in the current taxonomy is complex and may lead to inconsistent results across different investors. Therefore, a reliable assessment should be made directly by investee companies instead.

Pending the availability of necessary data for the proposed measures, investors should comply with proposed disclosures on a best effort basis to avoid unnecessary liability and compliance risks. Related compliance and verification requirements should also be future-proof and proportionate and only be introduced once a robust taxonomy is in place.

Platform on sustainable finance — The establishment of a platform on sustainable finance is supported as an essential channel to promptly inform the taxonomy and monitor related key developments. The industry is ready and willing to contribute to its work and to provide insight on the development and maintenance of the taxonomy.

Timeline — The current implementation timeline might lead to compliance challenges and liability risks for market players, as well as confusion for investors. A successful implementation should be based instead on a realistic timeline that avoids timetable misalignments between the adoption of the Regulation and that of related Delegated Acts specifying its requirements.

Published 6 November 2019