Insurance Europe has published an updated set of key messages regarding the European Commission’s Corporate Sustainability Reporting Directive (CSRD) initiative, in view of the ongoing trialogue discussions between the Commission, the Council of the EU and the European Parliament on their respective proposals for the CSRD.
As Europe’s largest institutional investor, the insurance industry is highly supportive of the proposal. For insurers to make appropriate investment decisions and to comply with sustainability regulation, it is vital that consistent, comparable and machine-readable sustainability data is available, and that it can be accessed and used efficiently.
The insurance sector would like to stress three key points, which would facilitate the CSRD in working as intended:
- The exemption of subsidiary reporting should be maintained and also apply to public-interest entities as it does for others, allowing insurers to report only at consolidated level. Sustainability strategies and policies are determined at group level. To adequately assess companies’ sustainability performance, it is therefore essential to allow reporting at group level.
- Insurance Europe strongly supports the proposals by the Commission and the Council to allow undertakings to use the same audit firm and does not support the European Parliament’s proposal to prohibit companies from engaging their statutory auditor for the assurance of the sustainability report. The principles of the Audit Directive on independence and conflict of interest should also apply for sustainability reporting.
- SMEs should be maintained in the scope, but the definition of SME undertaking should be improved to allow insurance SMEs to report under simplified standards. Insurers therefore welcome the explicit recognition by the Council in its proposals that the definition of net turnover must be adapted for credit institutions and insurance undertakings to take into account their specificities. However, the current Council proposal would need to be further improved to address the issue for insurers by including a recital making an explicit reference to the future sectoral definition in Solvency II of “low risk undertaking”.