Comments of the German Association of Public Insurers on EIOPA’s consultation paper on the Opinion on sustainability claims and greenwashing in the insurance and pensions sectors
The Association of German Public Insurers welcomes EIOPA’s consultation on the Opinion on sustainability claims and greenwashing in the insurance and pensions sectors. As Germany’s second largest primary insurance provider with a strong regional presence, the group is strongly committed to the goals of a more sustainable economy. The Public Insurers are signatories to the Principles for Responsible Investment (PRI) and take environmental, social and governance principles all into account with regard to their business decisions. With this in focus, public insurers support EIOPA's efforts to achieve greater consistency and legal certainty in sustainability claims.
General Comments
The Public Insurers assess the Opinion on sustainability claims and greenwashing from a differentiated perspective. On the one hand, it is essential to prevent greenwashing in the financial sector, while on the other hand it is also important to avoid unnecessary bureaucracy. This is particularly significant in regard to the European Commission's initiative to reduce reporting obligations for companies by 25 per cent.
Comments on specific questions
Question 2: Stakeholders’ views are sought where they believe that other requirements –beyond those already identified by EIOPA in this draft Opinion –already cover sustainability claims.
The association fully supports EIOPA in increasing consistency between the numerous sectoral as well as horizontal legal acts on sustainability claims and greenwashing. The complex interplay between the entire Sustainable Finance framework and the Unfair Commercial Practices Directive, including the upcoming changes due to the Green Claims Directive under current negotiation, might lead to overlaps, duplications, and inconsistencies.
- The Public Insurers support EIOPA in engaging in the legislative process of horizontal legislation sustainability claims by providing their expertise to avoid inconsistencies. Where there are already sectoral rules, insurance should be explicitly exempted from further horizontal legislation.
Question 3: Do you agree with Principle 1 and 2 and whether these principles help ensuring that sustainability claims are accurate?
Para 3.9 states: “If providers, as part of their strategy, have made specific sustainability-related commitments, they should ensure that these accurately reflect their overall investment strategies including their engagement with investee companies – and underwriting strategies for insurance providers.” This formulation conflicts with a differentiated view of investment and underwriting. For example, exclusions of certain fossil fuels in the investment of an insurer as part of a sustainability strategy should not imply the exclusion of these companies from insurance coverage. Whereas most insurance undertakings have already stopped investing into new coal power plants, it is obvious that the existing ones still need insurance protection until their (legal) phasing out. For more details, see the association’s position paper on “Ensuring sustainable insurance cover for industry and commerce.
- The Public Insurers therefore suggest deleting the specification “and underwriting strategies for insurance providers”.
Para 3.12 requires providers to “use terms “sustainable” and “green” only for products that disclose under Article 9 of SFDR, or that disclose under Article 8 of the SFDR and have a substantial share of sustainable investments, provided that they do not make investments in fossil fuels, except in economic activities classified as sustainable under the EU Taxonomy.” The SFDR does not provide a threshold of sustainable investments under Article 8, as the SFDR is regarded as a transparency regime rather than a labelling regime. Considering the current review of the SFDR and the envisaged changes towards a labelling system, the opinion on greenwashing should not pre-empt this aspiration.
- The Public Insurers proposes to delete the requirement of having a “substantial share of sustainable investments” and wait for the results of the review of the SFDR.
Para 3.25 contains requirements for communication with consumers: “If a product's sustainability features change over time, these changes should be promptly and transparently communicated to consumers or scheme members.” This time requirement is disproportionately high. Furthermore, the Opinion should make it clear that communication via the website is sufficient, as it is the fastest way.
- The Public Insurers suggest changing the wording to “If a product's sustainability features change over time, these changes should be transparently communicated to consumers or scheme members in due time on the website or via other means.”
Question 4: Do you agree with Principle 3? In particular do you agree that due diligence and proportionality should be taken into account when determining if a sustainability claim is substantiated with clear reasoning and facts?
Para 3.42 states: “Manufacturers should first carry out market research to understand what the sustainability preferences of different target markets are, provided that such research has not been done by other entities (e.g., the fund manager for a given fund that is offered as an investment option in an insurance product). Based on this they should carry out qualitative and quantitative testing, including via scenario analyses, to determine if the products’ sustainability features are aligned with the target market’s sustainability preferences (Article 6(1) of the POG DR).” This wording in the Opinion goes beyond the POG DR, which clearly indicates that scenario analyses should be carried out “where relevant”. Furthermore, quantitative testing of products is advised “depending on the type and nature of the insurance product”.
- The Public Insurers therefore suggest changing the Opinion in a way that reflects the character of the POG DR and ensures the proportionality element embedded within it: “Based on this they should carry out qualitative and -depending on the type and nature of the insurance product - quantitative testing, including via scenario analyses where relevant, to determine if the products’ sustainability features are aligned with the target market’s sustainability preferences (Article 6(1) of the POG DR).”
The Public Insurers are committed to support EIOPA in creating an efficient, proportionate, and credible framework for sustainable finance and look forward to further discussions.
