Insurance Europe has responded to the European Supervisory Authorities’ call for evidence on greenwashing.
The insurance sector appreciates the need for significant policymaking action on sustainability and has always been very supportive of the EC’s sustainable finance agenda objectives. However, no new regulation on greenwashing is needed for the sustainable finance framework to deliver on its high ambitions while addressing greenwashing risks.
This is because well established and effective rules already protect customers from unclear or misleading claims including on sustainability-related characteristics (eg the Unfair Commercial Practices Directive and the Unfair Terms Directive).
Insurers operate in a highly regulated environment in relation to sustainability claims, transparency and the implementation of robust processes and controls. If designed correctly, and putting aside the data and timetable or sequencing problems, ultimately, legislations under the EU sustainable finance framework have the potential to address greenwashing.
However, a significant part of the framework intended to prevent greenwashing is not yet fully in place and further clarification, coherence and guidance are needed to deliver on sustainable objectives.
In particular, the following key issues in the EU sustainable finance regulatory framework may currently lead to unintentionally flawed information:
- The lack of clarity and inconsistencies in certain EU rules (including mismatches in timelines and application dates). Resulting cases of differing interpretations must be clearly differentiated from cases of noncompliance with existing regulatory requirements which may be considered as greenwashing.
- The multiplication and sometimes contradicting definitions of what “green” is.
- The lack of data (or lack of reliable third-party data).
- The lack of maturity of methodologies and metrics for measuring impacts on sustainability factors.
Insurers must be able to offer many sustainable products to match with clients’ expectations.
Portfolios’ share of sustainable assets are expected to increase in the upcoming years in keeping with the clarification of the framework. In the meantime, insurers are doing their best to develop their climate and sustainability related policies, reporting and products.