(Thursday 23th November) At yesterday's round of negotiations on the insurance regulation Solvency II, EU policymakers fell short of delivering the regulatory framework needed to hold insurers accountable for the damage they pose to people and the planet. Instead of mandating transition plans with clear emissions targets, the final text only requires most European insurers to develop 'prudential plans and targets' to address risks associated with climate change.
Caroline Metz, Senior EU Policy Officer at ShareAction, commented: "EU policymakers have missed a crucial opportunity to require insurers to break their ties with fossil fuels, the primary driver of climate change. Yesterday’s decision represents a step backward from the transparency rules developed in the past two years, that promised greater accountability for the financial sector's impact on people and the planet.
“The Solvency II revision was a golden opportunity to push European insurers to develop robust transition plans with clear emissions reduction targets. However, the compromise, which focuses solely on insurers’ management of transition risks and ignores insurers’ impact, falls well short of what is needed for society and our planet.”
There is one final opportunity to improve the sustainability dimension of Solvency II. In the upcoming trilogue scheduled for early December, ShareAction urges EU policy makers to bring forward key elements, including effective supervision and transparency in implementing prudential plans. This would play a vital role in holding the insurance sector to account for its risk management processes.