Sustainable finance in the insurance and pensions sector
Sustainability is at the heart of the EU project and is key in ensuring long-term competitiveness of the EU economy and with it, the insurance and pensions sector.
Insurers and pension funds, as managers of large parts of society’s risks and important long-term investors have a particular interest in mitigating the impact of climate change and facilitating the transition to a more sustainable and resilient economy.
By integrating sustainability considerations from an environmental, social and governance (ESG) perspective into the regulatory and supervisory framework for insurers, reinsurers, insurance distributors and pension providers, EIOPA contributes to the European Commission's Sustainable Finance Action Plan and to the ‘Green Deal’.
EIOPA has been implementing an ambitious strategic plan on sustainability and climate change with the following objectives:
- Insurers should manage and mitigate ESG risks through their underwriting activity;
- Insurers and pension funds should reflect policyholder and pension scheme member preferences for sustainable investments, where relevant;
- Insurers and pension funds should adopt a sustainable approach in their investments based on principles of stewardship
EIOPA’s projects in sustainable finance
EIOPA has been carrying out several projects to establish its policy on sustainable finance and to develop tools and methods for ESG risk analysis, with a view to embed ESG risk analysis in regulation as well as in supervision.
EIOPA publically consults and organizes regular Roundtables on Sustainable Finance, to discuss its proposals with participants from EIOPA’s Stakeholder Groups, the European Commission, representatives of the insurance and pensions, asset management and rating industries, and representatives of consumers associations and civil society.
EIOPA is a member of the Network for Greening the Financial System and of the Sustainable Insurance Forum, as well as the European Commission's Sustainable Finance Platform for the taxonomy on sustainable economic activities.
In addition, EIOPA is aiming to improve its own environmental performance as an institution and to lower its impact on the environment. EIOPA has registered to the EMAS (Eco Management and Audit Scheme).
EIOPA’s mandate on sustainable finance, following the review of its founding regulation, is to:
- take into account sustainable business models and integration of ESG-related factors in the areas of its competence,
- develop criteria for identifying systemic risks and an adequate stress-testing regime, including potential environmental-related systemic risk,
- put in place a monitoring system, and
- develop common methodologies for union-wide assessment of resilience of financial undertakings taking into account risks stemming from adverse environmental developments and of the effect of environmental risks on the financial stability of financial institutions.