InsuranceEurope:Draft minimum safeguards for EU Taxonomy welcomed; rules must align with other upcoming sustainability reporting legislation
12 September 2022
Insurance Europe has responded to a call for feedback on the EU Platform on Sustainable Finance’s (PSF) draft report on minimum safeguards (MS).
The
draft report, which aims to advise the European Commission on the
application of MS as set out under Article 18 of the EU Taxonomy
Regulation, is welcomed by the industry.
The insurance industry
also agrees with the PSF’s proposed two-pronged approach, which includes
two sets of criteria for the establishment of non-compliance with MS:
one related to adequate due diligence processes implemented in companies
(ie relying on corporate reporting and disclosure) and the other
related to the actual outcome of these processes or the company’s
performance (ie relying on external checks on companies).
Insurance Europe also wishes to highlight the following points:
- European
insurers welcome the fact that the report clearly accounts for upcoming
EU legislation (eg the Corporate Sustainability Due Diligence Directive
(CSDDD) and the Corporate Sustainability Reporting Directive (CSRD)),
but caution against setting overly prescriptive requirements for the
short transition period.
- Compliance with the upcoming CSDDD should always be considered as fulfilling the MS.
- The
PSF's report should clarify the amendments needed in the EU’s
sustainability reporting standards (ESRS) to ensure complete compliance
with the MS. It is essential to integrate MS in the ESRS to ensure equal
data availability and to avoid fragmentation of reporting requirement
and data sources.
- The proposed approach is not suitable given
current data availability and reliability. Criteria, which (as of now)
rest on ESG rating agencies’ collection of information, should be
developed because many instances will remain where data supporting the
two-pronged approach is not available, at least for the foreseeable
future.
- Regarding external checks, the PSF should rethink the
proposed criterion on final conviction and provide for a clear framework
and timeframe according to which a company can be deemed compliant with
the MS again after a violation.
- The insurer-policyholder relationship should not be deemed equivalent to other business relationships.
- Better alignment on the definition of good governance within the EU sustainable finance framework is required.
full response
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