Up to four in five European insurers currently covered by sustainability reporting could soon fall outside the scope of the EU’s Corporate Sustainability Reporting Directive (CSRD), according to new research commissioned by Share Action.
At a time when European insurers are playing an important role in driving the EU transition towards a more sustainable economy, proposals currently on the table to change the company size and turnover thresholds could reduce transparency in the European insurance sector.
The argument presented by Share Action is that by reducing the availability of reliable sustainability data, insurers cannot adequately assess and manage their financial risks, with consequences for financial stability and, by extension, the wider economy.
Marika Carlucci, EU senior policy officer at Share Action, said: “If the current proposals go ahead, a vast majority of insurers – some of whom manage billions in assets – could be exempted from sustainability reporting obligations overnight. That would leave investors, supervisors, and citizens in the dark about how insurers are managing their sustainability-related financial.”
Many within the institutional investment world have long noted that the green transition relies on robust and comparable data.
“Weakening the CSRD now risks making financial markets less transparent, less stable and less prepared for the challenges ahead,” Carlucci added. “This is even more striking for insurers – the ones managing the risks of climate change and footing the bill for the extreme events it fuels.
EU policymakers must reconsider these proposals before they undo years of progress.”
The research also highlights what it considers further regulatory regression, pointing to the proposals to remove the obligation for companies to implement transition plans under the Corporate Sustainability Due Diligence Directive.
The research also outlines how the proposed Omnibus I changes – which aim to simplify the rules, reduce compliance burdens and impact corporate sustainability reporting – could also affect other key legislations for the insurance sector – such as the Sustainable Finance Disclosure Regulation and Solvency II, potentially further impacting upon insurers’ role in driving decarbonisation.
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