The Renewed Sustainable Finance Strategy published by the European Commission on 6 July contains further welcome steps towards advancing the objectives of the European Green Deal and improving the funding of sustainable projects. And the accompanying legislative proposal for an EU Green Bond Standard should facilitate capital flows to green investments and transition projects.
The Strategy and the Standard are key parts of the Commission’s ambitious European Green Deal to move Europe to a clean, circular economy and meet its ambitious goals for to curb climate change.
As Europe’s largest institutional investor, with €10.4trn of assets under management, the insurance industry supports measures to facilitate sustainable investment. It particularly welcomes the actions to finance the path of the real economy towards sustainability and to facilitate access to transition finance. In addition, the insurance sector appreciates the renewed ambition in the development of sustainable finance initiatives and standards at international level, as this recognises that sustainability is a global issue.
These policy actions, together with the wider set of Green Deal initiatives, have the potential to achieve the increase in attractive sustainable assets that the industry has long been calling for.
Olav Jones, Insurance Europe’s deputy director general, commented: “It is important that the link is made between the Renewed Sustainable Finance Strategy and the review of the insurance sector’s prudential regulation — Solvency II — that is currently underway. The Solvency II review must address the regulatory disincentives to invest long-term and must result in more appropriate measurement of insurers’ capital requirements so that insurers’ capacity to invest can increase and the industry can fully contribute to this Strategy’s laudable goals. And it is vital that the risk-based nature of the Solvency II framework is maintained when considering potential actions to embed sustainability risks within it.”
Insurance Europe also welcomes the Commission’s efforts to stimulate the issuance of both sovereign and corporate green bonds through the creation of an EU Green Bond Standard whose core components are standardised at EU level to safeguard transparency and comparability.
“The EU Green Bond Standard has the potential to help finance the transition in Europe and allow investors to invest in green bonds with confidence,” said Jones. “Insurance Europe also welcomes the fact that the standard encourages its use by sovereign issuers.”
Insurance Europe will now study the Commission’s proposals in detail.