In a world where sustainability risks are growing and consumer interest in sustainable products is increasing, insurers and pension providers are adapting their product offering. However, the influx of products with sustainability features has also given rise to misleading claims, leading to concerns about greenwashing.
Consumers face additional risks such as rising insurance costs, unawareness of coverage limitations, and undisclosed exclusions.
Fostering fair behaviour among undertakings involves enhancing transparency, addressing product offerings, and actively monitoring instances of greenwashing.
EIOPAs activities to prevent greenwashing and foster sustainable behaviour:
- Introducing transparency requirements: EIOPA is actively introducing transparency requirements and monitoring potential greenwashing risks in the market.
- Ensuring convergent implementation of sustainability reporting: EIOPA focuses on ensuring consistent implementation of sustainability reporting across the industry.
- Addressing demand for catastrophe risk coverage: efforts are made to remove obstacles to the demand for cat risk coverage, incorporating sustainability features in product design and distribution.
Preventing greenwashing through the disclosures of the Sustainable Finance Disclosure Regulation (SFDR)
SFDR, aimed at combatting greenwashing, requires insurers and pension funds to disclose sustainability-related information. This includes:
- providing annual overviews of the negative impact of the investments on the environment and society
- disclosing sustainability features of financial products, such as insurance-based investment products and pension schemes.
EIOPA, in collaboration with ESMA and EBA, has proposed Regulatory Technical Standards under the SFDR. These standards were adopted and are applicable under the SFDR Delegated Regulation
In November 2023, the European Supervisory Authorities proposed amendments to review the SFDR Delegated Regulation.
Annually the European Supervisory Authorities release reports on the extent of voluntary disclosure of Principal Adverse Impacts (PAIs) under SFDR: 2023 Report, 2022 Report.
Integrating customer sustainability preferences
EIOPA has provided Guidance on integrating customer sustainability preferences in the Insurance Distribution Directive (IDD) suitability assessment. This aims to help insurance distributors align policyholders' preferences with the financial products offered.
EIOPA’s advice on greenwashing
EIOPA, mandated by the Commission, provides advice on: defining greenwashing, assessing greenwashing instances, supervising greenwashing, assessing the status of status of implementation of sustainable finance related legislation. A progress report has been published, outlining the initial findings on greenwashing and a final report is set to be completed in May 2024.
Find out what greenwashing is, how it can take place and what impact it can have on consumers.
Corporate sustainability reporting
EIOPA actively contributes to Corporate Sustainability Reporting requirements, aiming to strengthen social and environmental reporting by companies, including insurers. These requirements ensure that investors and other stakeholders have access to the information they need to assess the impact of companies on people and the environment, as well as evaluating financial risks and opportunities related to sustainability.
Learn more:
- Advice on KPI for environmentally sustainable activities by insurers or pension funds under Article 8 of the taxonomy regulation,
- Opinion on European Sustainability Reporting Standards
Addressing demand for catastrophe risk coverage
In addition to these measures, EIOPA has issued a supervisory statement on exclusions in insurance products arising from systemic events and measures to address the demand-side aspects of the natural catastrophe protection gap, further safeguarding consumers from systemic risks.
Consumer-focused factsheet
The three European Supervisory Authorities (EBA, EIOPA and ESMA) have created a factsheet addressing consumers’ frequently asked questions about sustainable finance. The factsheet offers valuable tips to consumers considering to buy financial products with sustainability features, covering loans, savings, investments, insurances and pensions.