Sustainable finance

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.

At its latest Roundtable on Sustainable finance, EIOPA stressed the importance for insurers and pension funds to manage sustainability risks as part of their risk management, as well as to contribute to reducing risks to sustainability for society.

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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.

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Solvency II | Solvency requirements | Sustainability

Discussion Paper: Methodology on potential inclusion of climate change in the nat cat standard formula

This Discussion Paper is a follow-up to EIOPA’s Opinion on Sustainability within Solvency II (EIOPA, 2019). The opinion highlighted that further work is needed to investigate whether additional climate change-related perils such as droughts and wildfire could be better captured in the Solvency II...
Solvency II | Sustainability

EIOPA launches discussion paper on a methodology for integrating climate change in the standard formula

Today, the European Insurance and Occupational Pensions Authority (EIOPA) published a discussion paper on a methodology for the potential inclusion of climate change in the Solvency II standard formula when calculating natural catastrophe underwriting risk. This discussion paper is a follow-up to...
Taxonomy | Sustainability | Disclosure

Consultation on EIOPA advice regarding Article 8 of the Taxonomy Regulation

This consultation refers to the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build those ratios. In this consultation, EIOPA considers whether the mandatory ratios of non-...
Taxonomy | Sustainability | Disclosure

Consultation on EIOPA advice regarding Article 8 of the Taxonomy Regulation

This consultation refers to the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build those ratios. In this consultation, EIOPA considers whether the mandatory ratios of non-...
Taxonomy | Sustainability | Disclosure

Consultation on EIOPA advice regarding Article 8 of the Taxonomy Regulation

This consultation refers to the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build those ratios. In this consultation, EIOPA considers whether the mandatory ratios of non-...
Sustainability | Disclosure

EIOPA consults on insurers’ key performance indicators on sustainability for non-financial reporting

The European Insurance and Occupational Pensions Authority (EIOPA) started today a consultation on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build those ratios...
Sustainability | Disclosure

EIOPA consults on insurers’ key performance indicators on sustainability for non-financial reporting

The European Insurance and Occupational Pensions Authority (EIOPA) started today a consultation on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build those ratios...
Sustainability

Sustainable Finance Roundtable

EIOPA’s fourth roundtable on sustainable finance took place on 16 December 2020 , from 09:00 to 17:00. It covered recent and upcoming deliverables of EIOPA on integrating environmental, social and governance risk assessment in the regulatory and supervisory framework for insurance and pensions ...
Sustainability

Letter from the European Commission to the ESAs on the application of Regulation (EU) 2019/2088 on the sustainability-related disclosures in the financial services sector

Letter from the European Commission regarding the application of Regulation (EU) 2019/2088 on the sustainability related disclosures in the financial services sector and related technical standards.
Solvency II | Sustainability

EIOPA consults on the supervision of the use of climate change scenarios in ORSA

Today, the European Insurance and Occupational Pensions Authority (EIOPA) published a consultation on the use of climate change risk scenarios in the Own Risk and Solvency Assessment (ORSA) in the form of a draft supervisory Opinion. In EIOPA’s view, it is essential to foster a forward-looking...
ORSA | Scenario analysis | Sustainability

Consultation on the draft Opinion on the supervision of the use of climate change risk scenarios in ORSA

The consultation is a follow-up to last year’s Opinion on Sustainability within Solvency II , which recommended that (re)insurers consider climate risks beyond the one-year time horizon through the system of governance, risk-management system and the Own Risk and Solvency Assessment (ORSA). The...
ORSA | Scenario analysis | Sustainability

Consultation on the draft Opinion on the supervision of the use of climate change risk scenarios in ORSA

The consultation is a follow-up to last year’s Opinion on Sustainability within Solvency II , which recommended that (re)insurers consider climate risks beyond the one-year time horizon through the system of governance, risk-management system and the Own Risk and Solvency Assessment (ORSA). The...
ORSA | Scenario analysis | Sustainability

Consultation on the draft Opinion on the supervision of the use of climate change risk scenarios in ORSA

The consultation is a follow-up to last year’s Opinion on Sustainability within Solvency II , which recommended that (re)insurers consider climate risks beyond the one-year time horizon through the system of governance, risk-management system and the Own Risk and Solvency Assessment (ORSA). The...
Risk assessment | Supervision

EIOPA launches consultation on Supervisory Statement on the use of risk mitigation techniques by insurance and reinsurance undertakings

Today, the European Insurance and Occupational Pension Authority (EIOPA) launched a consultation on EIOPA’s Supervisory Statement on the use of risk mitigation techniques by insurance and reinsurance undertakings. The aim of this statement is to promote supervisory convergence on the assessment of...
COVID-19 | Risk assessment

EU financial regulators assess risks to the financial sector after the outbreak of COVID-19 and call for enhanced cooperation

The three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) have issued their first joint risk assessment Report of the financial sector since the outbreak of the COVID-19 pandemic. The Report highlights how the pandemic has led to further amplified profitability concerns across the...
COVID-19 | Risk assessment

Report on risks and vulnerabilities in the EU financial system

The outbreak of the Coronavirus has brought huge social disruptions and unprecedented economic challenges, with inevitable impact on the EU financial sector. Valuation, liquidity, credit and solvency risks have increased across the board. While liquidity positions of EU banks remained relatively...
Sustainability | Disclosure

Survey on product disclosure templates under the Sustainable Finance Disclosure Regulation

The European Supervisory Authorities (ESAs) welcome comments on this survey setting out the details of the presentation of the information to be disclosed pursuant to Article 8(3), Article 9(5) and Article 11(4) of the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27...
Sustainability | Disclosure

Survey on product disclosure templates under the Sustainable Finance Disclosure Regulation

The European Supervisory Authorities (ESAs) welcome comments on this survey setting out the details of the presentation of the information to be disclosed pursuant to Article 8(3), Article 9(5) and Article 11(4) of the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27...
Taxonomy | Sustainability | Financial stability

The EU sustainable finance taxonomy from the perspective of the insurance and reinsurance sector

This article investigates how much investment held by insurers may be eligible to the EU sustainable finance taxonomy. To this aim, Solvency II item-by-item investment data is employed. As part of the Green Deal, the Commission presented the European Green Deal Investment Plan, which will mobilize...
Taxonomy | Sustainability | Financial stability

The EU sustainable finance taxonomy from the perspective of the insurance and reinsurance sector

This article investigates how much investment held by insurers may be eligible to the EU sustainable finance taxonomy. To this aim, Solvency II item-by-item investment data is employed. As part of the Green Deal, the Commission presented the European Green Deal Investment Plan, which will mobilize...
Shared resilience solutions | Protection gap | Sustainability

Issues Paper on resilience solutions for pandemics

The paper recognises that private insurance solutions alone will not be sufficient to protect society against the financial consequences of future pandemics. Solutions will require both public and private sector involvement, and build on the following four key elements: Proper risk assessment Risk...
Shared resilience solutions | Protection gap | Sustainability

Issues Paper on resilience solutions for pandemics

The paper recognises that private insurance solutions alone will not be sufficient to protect society against the financial consequences of future pandemics. Solutions will require both public and private sector involvement, and build on the following four key elements: Proper risk assessment Risk...
Shared resilience solutions | Protection gap | Sustainability

Issues Paper on resilience solutions for pandemics

The paper recognises that private insurance solutions alone will not be sufficient to protect society against the financial consequences of future pandemics. Solutions will require both public and private sector involvement, and build on the following four key elements: Proper risk assessment Risk...
Shared resilience solutions | Protection gap | Sustainability

Insurance against pandemic risk: EIOPA identifies options for shared resilience solutions

Today the European Insurance and Occupational Pensions Authority (EIOPA) published its Issues Paper highlighting options for developing shared resilience solutions for pandemic risk. The paper recognises that private insurance solutions alone will not be sufficient to protect society against the...
Shared resilience solutions | Protection gap | Sustainability

Insurance against pandemic risk: EIOPA identifies options for shared resilience solutions

Today the European Insurance and Occupational Pensions Authority (EIOPA) published its Issues Paper highlighting options for developing shared resilience solutions for pandemic risk. The paper recognises that private insurance solutions alone will not be sufficient to protect society against the...
Shared resilience solutions | Protection gap | Sustainability

Insurance against pandemic risk: EIOPA identifies options for shared resilience solutions

Today the European Insurance and Occupational Pensions Authority (EIOPA) published its Issues Paper highlighting options for developing shared resilience solutions for pandemic risk. The paper recognises that private insurance solutions alone will not be sufficient to protect society against the...