(Tuesday 18th July) Today, the European Parliament’s Economic and Monetary Affairs (ECON) Committee adopted its position on the review of EU insurance regulation, Solvency II.
Commenting on the outcome of the vote, Caroline Metz, Senior EU Policy Officer at ShareAction said:
“As extreme heatwaves spread across the globe, and as insurers themselves feel the hit of claims arising from climate catastrophes, the need for insurance regulation that meaningfully steers the industry away from risky and harmful fossil fuel activities could not be clearer.
Unfortunately, besides a small step forward in the shape of mandatory transition plans, today was a missed opportunity to align the sector with the EU’s goal of net zero. The ECON Committee’s adopted position disappointingly lacks the ambition urgently needed to tackle the climate crisis.
We need to see less capital relief, less exemptions, and much more robust sustainability measures for insurers. For example, ‘one for one’ capital requirements to disincentivise investment in new fossil fuel projects, and the introduction of mandatory stewardship so insurers systematically drive their investee companies towards more sustainable business models.”
Notes to editors
In September, the European Commission, Council and Parliament will enter the last phase of negotiations to agree on a final version of the Solvency II Directive review.
ShareAction is calling on policymakers to vote in favour of the sustainability compromises in the Directive, which include, among others:
- Mandatory transition plans (aligned with the banking package currently in trialogues negotiations);
- Climate change scenario analysis (as proposed by the Commission initially);
- Additional disclosure as part of insurers’ Solvency and Financial Condition Reports;
- A mandate for EIOPA to conduct research into whether capital requirements should be changed in light of sustainability risks, especially related to fossil fuel assets;
- Additional mandates for EIOPA around ESG risks and biodiversity.
In addition, ShareAction is calling on the European Insurance and Occupational Pensions Authority (EIOPA) to continue its work reassessing capital requirements in light of sustainability risks, especially concerning the high risks posed by investments in new fossil fuel related projects, and for the Commission to take action on this crucial topic.