Insurance Europe responded to a consultation by the European Financial Reporting Advisory Group (EFRAG) on due process procedures for EU sustainability reporting standard setting.
Sustainability data plays a particularly important role for insurers who, as well as being preparers of ESG data, are the largest institutional investor group. ESG data from investee companies is therefore vital for insurers to be able to make sustainable investment decisions and to comply with EU disclosure requirements.
European insurers are therefore fully committed to achieving a high level of transparency based on the upcoming sustainability reporting standards. Insurers also support global cooperation on sustainability standardisation between EFRAG and international standard-setters, as this is key to achieving international convergence. Furthermore, insurers support the fact that EFRAG — through demonstrating the EU’s pioneering role in this field — is committed to contributing to the development of a global sustainability reporting system.
At the same time, while Insurance Europe supports this ambition and recognises the need for rapid progress in the development of sustainability standards, this should not come at the expense of sound due process and stakeholder involvement that will ensure high quality standards.
Funding for sustainability standardisation should reflect the EU’s level of ambition. Insurance Europe is supportive of a due process mechanism similar to what is currently in place for the financial reporting pillar under which Insurance Europe contributes financially, has a governance role both at General Assembly level and on the EFRAG Board, and provides expert input through the Technical Expert Group and the Insurance Accounting Working Group.
Insurance Europe has significant interest in playing a role in the new sustainability pillar and will carefully consider the costs and benefits of potential financial contributions. However, given the benefits to and focus on the wider public good for the sustainability work of EFRAG, the funding mechanism for this pillar may need to be different to the financial reporting pillar.