Insurance Europe: exclude derivatives from proposed greenwashing regulations

Insurance Europe, the European insurance and reinsurance federation, has said that several types of investments should be excluded from proposed new disclosure regulations for certain sustainable products.

According to the body, these types of investments include those where the policyholder makes the choice of where to invest; and exposures to undertakings not reporting under the Corporate Sustainable Reporting Directive.

Also excluded should be derivatives, as “they are not connected to an economic activity under the taxonomy”.

While excluded from the main indicator, Insurance Europe said exposure to all of the above should be provided separately as complementary disclosures.

The comments are part of a formal response to a consultation by the European Commission (EC) on the draft delegated regulation on Article 8 of the Taxonomy Regulation on entity level disclosures.

According to the European Commission, the proposed changes aim to increase transparencyin the market and help prevent so-called ‘greenwashing’ by providing information to investors about the environmental performance of assets and economic activities of financial and non-financial undertakings:

“The Article 8 disclosures delegated act will increase transparency in the market, mitigate risks of greenwashing and subsequent reputational risks for financial institutions. This provision will also increase the space for green finance and encourage financial market participants to design financial products and portfolios.”

On a more positive note, Insurance Europe also said that insurers are supportive of the proposal and, in particular, appreciate that the proposed timeline – i.e. application in 2022 with full reporting in 2023 – will help allow financial market participants time to implement the necessary IT, data, validation and management processes.

Insurance Europe added that it also supports the alignment with the investment disclosures for asset managers and insurers, as they “improve the consistency and comparability of the KPI across financial market participants”.

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