Commenting on the vote, Caroline Metz, EU Policy Manager at ShareAction, said:
"Insurers’ investments in climate-damaging fossil fuels have officially been recognised as carrying high risks, marking a significant step forward in the path toward stronger financial regulation. This sends a strong signal to European policymakers about the undeniable link between climate change and financial stability. There is now an urgent need for regulatory change to account for such risks and better protect the planet and its people.
"EIOPA’s rigorous analysis clearly shows that the risks tied to fossil fuels assets are substantial and have been underestimated until now. These findings are especially important as they respond to industry and policy concerns that regulation should remain risk- and evidence-based. The evidence is now on the table, and it speaks loud and clear.
"EIOPA's decision may seem minor in light of the climate emergency, but its impact could be far reaching. If the EU wants to remain a global leader in sustainable finance, the European Commission must act on these findings and propose regulatory change. Time is running out, and bold action is critical to safeguard our economy and its people from the present and future risks of fossil fuels investments."
Notes to Editors:
This vote comes as part of the review of Solvency II, the EU’s insurance legislation, which began in 2021. As part of this review, EIOPA was mandated to examine whether a differentiated prudential treatment of assets exposed to sustainability risks, for example fossil fuel related assets, was justified. Calls for such a review of prudential rules have been made by several CSOs, including ShareAction, and industry stakeholders alike.
EIOPA conducted a thorough analysis of the financial risks linked to unsustainable investments, particularly fossil fuels, and ran two public consultations on the topic.
Its latest report, endorsed by its Board of Supervisors, confirmed that fossil fuel assets carry higher risks than those linked to other economic activities, notably because of the high levels of transition risk they entail.
EIOPA presented three policy options to address these risks, two of which proposed the introduction of higher capital requirements for fossil fuel-related assets, albeit with significant differences in the level of ambition.
