Sustainability issues pose risks and opportunities to the insurance and pension sectors
Climate change, environmental and social risks can have an important impact on human, social and economic life. If not managed properly, they can pose material risks to the assets and liabilities of insurers and pension providers.
At the same time, the insurance and pensions sector can play an important role in the mitigation and adaptation to climate change or sustainability risks, through their investments, products and services. Given their role as society’s risk managers and important long-term investors, insurers and pension funds have a unique opportunity and responsibility to address sustainability-related challenges and facilitate the transition to a more sustainable and resilient economy.
What are EIOPA’s main areas of activity?
Through its work on sustainable finance, EIOPA aims to ensure that (re)insurers and occupational pension funds integrate sustainability risks in their risk management to protect consumers and secure financial stability. In doing so, EIOPA aims to ensure that insurers and pension funds can continue to offer relevant and affordable risk management solutions against natural catastrophes or old age poverty.
EIOPA’s activities on sustainable finance reflect the need for global action to enable decisive progress on the transition to a more sustainable economy. Sustainable finance is a strategic priority area in EIOPA’s work programme 2022-2024, and the Commission’s Strategy for financing the transition to a sustainable economy encapsulates work by EIOPA in delivering on the Green Deal.
In line with EIOPA’s founding regulation and sectoral regulation on insurance and occupation pensions, EIOPA’s 7 key areas of activity on sustainable finance for 2022-2024 are the following:
- Integrate ESG risks in the prudential framework of insurers and pension funds
- Consolidate the macro/microprudential risk assessment of ESG risks
- Promote sustainability disclosures and a sustainable conduct of business framework
- Support supervision of ESG risks and supervisory convergence in the EU
- Address protection gaps
- Promote the use of open source modelling and data in relation to climate change risks
- Contribute to international convergence for the assessment and management of sustainability risks
The increase in consumers’ demand for investments with sustainability-related features was followed by an increase in offerings with sustainability-related features, giving rise to the risk of greenwashing. EIOPA, in its 2021 Consumer Trends Report, had already warned about a possible increase of greenwashing related risks, and highlighted the need to monitor and mitigate it.
EIOPA as well as the other European Supervisory Authorities (ESAs) have received a request for input from the European Commission on greenwashing risks in relation to sustainability claims and the supervision of sustainable finance policies. The request addresses three main areas: understanding and better monitoring greenwashing and related financial risks; taking stock of the implementation and supervision of sustainable finance policies aimed at preventing/addressing greenwashing; and assessing the supervisory and enforcement response.
How to stay informed about our work?
EIOPA organizes regular Roundtables on Sustainable Finance to discuss past and upcoming work and the vital role that insurance and pensions play in strengthening society’s resilience to sustainability risks.
Our roundtables gather participants from Stakeholder Groups, the European Commission, representatives of the insurance and pensions, asset management and rating industries, and representatives of consumers associations and civil society.
Roundtables are public events and registrations are open to everyone.
Cooperation on sustainable finance
Climate change does not stop at borders. As a member of the Network for Greening the Financial System (NGFS), the Sustainable Insurance Forum (SIF) and the International Association of Insurance Supervisors (IAIS), EIOPA cooperates with European and international supervisory and standard-setting bodies to establish convergent supervisory practices for sustainability risks in the financial services sector.
EIOPA’s deliverables on sustainable finance
Find out more about our work in this area. Here below search for news, reports, consultations, as well as speeches, interviews and events in the area of sustainable finance.