Insurance Europe support the efforts of EC for a sustainable economy

10 February 2021 —
Insurance Europe has published its response to a consultation by the European Commission (EC) on sustainable corporate governance, including matters regarding social and human rights, climate change and the environment.

The insurance industry strongly supports the EU's sustainability objectives and already makes a significant contribution towards the transition to sustainability. However, should the Commission decide to establish an EU-level legal framework for sustainable corporate governance, it must strike the right balance between the benefit of greater transparency and the burden it would impose on companies.

Such a framework should focus on sectors that are lagging behind in the transition to sustainability and thoroughly consider existing sectorial sustainability rules. For example, insurers are already subject to several requirements to integrate considerations about adverse impacts on human rights and environmental issues into their corporate governance frameworks.

In order for the Commission to propose new legislative requirements on sustainable corporate governance, the following issues should be considered:

  • Carefully assess the impact of measures that already cover the integration of sustainability into corporate governance frameworks for the financial sector: eg the Sustainable Finance Disclosure Regulation and proposals to amend the Solvency II framework. This sectoral legislation is currently ignored in the Commission's studies in this area, which risks creating inconsistency and overlaps, especially with initiatives related to the 2018 Action Plan on Sustainable Finance.
  • Recognise there is no "one size fits all" solution: eg in terms of stakeholder engagement and remuneration. The proposed approach to due diligence should be principles-based and risk-based, as well as proportionate and context-specific.
  • Work to address sustainability through a global approach and international coordination.
The insurance industry also agrees with the EC that due diligence is a risk-based, proportionate and context-specific concept. However, it remains unclear how generic, binding due diligence requirements should be designed in a feasible and proportionate way. For this reason, the insurance industry is in favor of a principles-based approach to a possible corporate due diligence duty, in line with existing standards and conventions. This would not preclude the possibility of integrating it with additional requirements for sectors more exposed to sustainability risks.

Source: Insurance Europe