17 May 2021

Insurance Europe: Workable, clear and consistent disclosures are needed for taxonomy-related information

Insurance Europe has published its response to a consultation conducted by the European Supervisory Authorities (ESAs) on a single template for product disclosures under the Taxonomy Regulation.

The Taxonomy Regulation empowers the ESAs to develop additional disclosure obligations for sustainable products that invest in Taxonomy eligible activities. To do so, the ESAs will amend the regulatory technical standards (RTS) of the Sustainable Finance Disclosure Regulation (SFDR) to create a single template for sustainability disclosures. This is welcome, as it will achieve consistency between SFDR and the Taxonomy Regulation, while making regulatory requirements more efficient. 

However, in order to achieve the Taxonomy’s objectives, some areas require urgent attention:

• Insufficient availability and reliability of ESG data, especially taxonomy-related information – Such information is limited at this stage. Insurers should therefore be allowed to comply using reasonable best efforts, so that they are not exposed to unnecessary liability risks. They should also not be forced to rely on expensive third-party data providers in order to comply with the proposed obligations. 
• Consistency with other taxonomy-related work – This is necessary, both in terms of content and timing, so that insurers can implement the RTS smoothly.
• The challenging implementation timeline – The final single template is expected to be published in the Official Journal very late in 2021, shortly before the actual proposed application date of 1 January 2022. 
• The draft ESG product templates are already overly complex and long – With the addition of taxonomy-related information, the final templates risk being too detailed, overly complex and long for customers. Therefore, the new changes related to the Taxonomy Regulation should only introduce essential changes to the SFDR RTS.
• The limited consumer testing of the disclosure templates – Testing was only performed in two countries, which is not representative of the variety of EU markets and consumers.

Efforts are therefore still needed by the ESAs and the EC to address these issues.

Full response

Insurance Europe

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