BETTER FINANCE recognises EIOPA’s efforts to provide guidance on insurers’ sustainability risk plans and endorses many of the consultation’s proposals.
BETTER FINANCE supports the proposal to incorporate a long-term climate scenario through a materiality assessment on climate risk, highlighting the importance of aligning the sustainability materiality and exposure assessments with the own risk and solvency assessment (ORSA) framework. This approach is viewed as fundamental for capturing both direct and indirect financial risks.
The guidance clarifying the relationship between prudential sustainability risk plans and the Climate Mitigation Transition Plan (CMTP) for disclosure under CSRD/CSDDD is well received. However, BETTER FINANCE notes that further clarification on the use of a single transition plan across different legislations—and the potential benefits of preparing such a plan even for undertakings currently out of scope—would be beneficial. Similarly, the avoidance of duplication between Solvency II disclosures and public reporting under CSRD is seen as critical, particularly considering upcoming revisions to CSRD requirements.
The European Sustainability Reporting Standards (ESRS) is recognised as a strong foundation for insurers to disclose sustainability risk strategies. Its extensive scope and detailed framework facilitate the collection of comprehensive data relevant to assessing financial risks. This consistency in baseline climate change scenarios is instrumental in creating a level playing field and enhancing the comparability of insurers’ assessments.
The emphasis on robust governance structures—specifically the integration of double materiality assessments is welcomed. Enhancing clarity on the monitoring responsibilities, including the necessary sustainability skills of those involved, is seen as a positive step toward ensuring effective risk management.
Finally, there is general agreement on the relevance of both backward- and forward-looking metrics, with a call to refine climate metrics to also address underwriting risks and support for efforts that implement sustainable finance policies in the insurance sector through the lens of Solvency II and the EU Green Deal.
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