Good morning and welcome to EIOPA's 2025 Sustainable Finance Conference.
Thank you all for joining us today. We are here to discuss sustainability and effective management of climate-related financial risks. When I look at today's speakers and attendees—regulators, industry leaders, policymakers, and other stakeholders—I see the public and private sectors coming together, with each of us bringing our expertise and resources to the table.
Indeed, addressing climate challenges requires a joint coordinated effort. Your presence today reflects this shared commitment, and I am truly pleased to see so many of you here.
We have an escalating climate crisis on our hands: 2024 was the warmest year on record, with Europe being the fastest-warming continent.
Since 1980, natural catastrophes have caused over €900 billion in direct economic losses across the European Economic Area. Nearly one fifth of these losses (18%) occurred in just the past three years.
This is the financial face of climate change—a reality that is reshaping economies, straining resources, and testing the resilience of financial systems globally. And when we look at our progress toward climate goals, both in Europe and around the world, we are falling short.
Regardless of one’s ideological convictions or political positions, these risks are real and present. And there is a growing pressure to do more to address them.
At the same time, we are seeing that the political climate has shifted in some parts of the world, with climate action taking a back seat to other priorities. We have seen the withdrawal from the Paris Climate Accords and the scaling back of climate mitigation measures. And so it is all the more important that Europe maintains its leadership and pushes ahead.
The current geopolitical environment is putting pressure on Europe in many ways, including the need to boost competitiveness. We are seeing important steps being taken in this direction, at national and EU levels.
Let me be clear: climate impact mitigation and competitiveness are not competing priorities. Instead, enhanced climate resilience will contribute positively to our competitiveness, and to financial stability. Successful market participants of tomorrow will be those who embrace sustainability today.
The theme of today’s conference—Driving Resilience and Action in a Warming World—reflects a clear approach: strengthening our financial systems against mounting climate pressures by implementing concrete, meaningful actions.
Protection Gaps
Let me now share EIOPA’s perspective on several critical issues, beginning with our work on natural catastrophe, also known as natcat, protection gaps.
Historically, three-quarters of natural catastrophe economic losses in Europe have not been insured. This gap is expected to widen as the impact of climate change grows, posing a risk to our economy and financial stability.
In view of this, Europe's businesses and homes need to increase their insurance cover to better withstand what are becoming more frequent and more destructive natural catastrophes.
EIOPA has analyzed factors that hinder insurance coverage uptake.
On the demand side, we see a lack of awareness and risk misperception among consumers.
Many Europeans simply underestimate their exposure to natural catastrophe risks and the potential financial impacts.
Achieving behavioural change on the part of citizens depends on greater awareness. So we need to do more to educate, to inform and to incentivize consumers to contribute to climate risk adaptation. One way to do this is through impact underwriting.
Another way is by providing consumers access to tools designed to raise awareness. And this is why we are proposing the development of such a tool, one which would help consumers better understand how vulnerable their properties are to natural hazards, the importance of having proper insurance coverage, and the steps they can take to prevent or reduce potential damage. We are now reviewing the results of our consultation and exploring next steps in the realisation of this project. You will hear more about this later today.
On the supply side, we observe increasing exclusions and rising premiums in high-risk areas, making coverage unaffordable for many precisely when they need it most. And the continued availability (and affordability) of insurance for nat cat risks is of course the basis for narrowing the existing gap.
ECB-EIOPA Collaboration
Recognising that we must promote a better management of risks in order to reduce the impact on EU citizens, business and the economy, EIOPA, together with the ECB published a paper proposing policy options to reduce the gap, based on a so-called 'ladder’ approach. These, as you know, include:
- Mitigation and adaption measures by citizens, businesses, cities and countries;
- Private insurance, including incentives for adaptation or mitigation;
- Reinsurance and alternative risk transfer mechanisms such as catastrophe bonds to transfer risk to capital markets;
- National-level public-private partnerships;
- and EU-wide public scheme for large-scale catastrophes.
Since the publication of this paper, Europe has experienced further devastating catastrophes, such as the flooding in Valencia last year, the flooding in the north of France and the impact of storm Eowyn in Ireland this year. These events have again shown us that natural disasters at the scale we are seeing them today can easily overwhelm the capacity of national governments. They have shown that we need a European approach to address the effects of climate change—one with risk prevention at the heart.
And this is precisely what we have put forth in EIOPA’s second joint paper with the ECB published late last year. There, we look at the possible role of European solutions in reducing the impact of natural catastrophes stemming from climate change.
In short, our proposal builds on existing national and EU structures, suggesting a two-pillar approach that would both diversify the risk across Europe and introduce strong incentives for prevention and adaptation measures.
National schemes are valuable. The intention is not to replace them, but to acknowledge that a coordinated European response can offer more robust protection against growing climate risks. And let me be clear: this is not about merely sharing losses. It is about taking a collective European approach to addressing a problem that concerns us all.
And this is why we will continue working on this, exploring the benefits that could arise from European solutions, as well as identifying the challenges which we will need to address. And we stand ready for any follow-up work in this area.
Solvency II Framework
Now I would like to turn to the regulatory framework and say a few words on our work to keep Solvency II fit for purpose—to make sure that it remains effective in addressing climate and sustainability risks.
As risks evolve, so too our monitoring and regulatory approaches must adapt accordingly.
In the context of the Solvency II review, EIOPA has issued comprehensive advice and guidance to support the sectors’ sustainability risk management, addressing governance requirements, own risk and solvency assessment, as well as the prudential treatment of sustainability risks related to insurers’ assets and liabilities.
Earlier this year, we completed a comprehensive reassessment of natural catastrophe risks within the Solvency II standard formula, and proposed calibration adjustments for flood, hail, earthquake, and windstorm risks. This recalibration responds directly to the evolving risk landscape we observe in recent climate data, using the latest available models. It ensures that capital requirements properly reflect the increasing impact of climate-related events, with a forward-looking perspective. It does so factually, assessing risks, and does not go into assessing brown or green assets.
On our work on Management of Sustainability Risks, including Sustainability Risk Plans: we recently concluded a consultation on Regulatory Technical Standards and are now evaluating the feedback we received. The standards we are developing aim to establish a balanced framework with proportionality in mind and to avoid unnecessary administrative complexity for supervised entities.
Simplification and Burden reduction
As you know, the Commission recently adopted a new package of proposals to simplify EU rules, boost competitiveness, and stimulate additional investments. These proposals contain measures to also streamline and simplify sustainability reporting with the aim of reducing unnecessary burdens for the industry.
EIOPA welcomes this initiative. A more efficient and proportionate regulatory framework will enable the industry to focus on delivering innovative, affordable, and sustainable financial solutions.
In light of these Omnibus package proposals, to enable EIOPA to deliver on these objectives, I believe the timeline for finalizing the RTS should be extended until there is stability on the scope and extent of the revised CSRD/ESRS requirements. This would ensure our approach remains aligned with the broader simplification efforts.
More generally, EIOPA’s view is that simplification cannot come at the expense of financial stability or consumer protection. It must ensure that the data collected remains impactful, meaningful, and sufficient.
Given the mounting climate risks, we need high-quality sustainability data to help (re)insurers and occupational pension funds identify, measure, and manage sustainability-related risks.
Sustainability reporting is what enables us to get complete, comparable information—to better understand sustainability challenges and support effective supervision.
It provides consumers, investors, and supervisors reliable information to make informed decisions, while offering transparency for market participants. And it is critical to enable investors to support the transition to a more sustainable economy, while preventing greenwashing. Having said that, I do think we can achieve that call with less reporting than was foreseen.
EIOPA will work closely with the European Commission, our NCAs, and the industry in the implementation of the Omnibus package to make sure that we strike the right balance between reducing regulatory burdens and maintaining standardized, consistent and relevant data. If we truly want to advance sustainability and move towards a risk-based, evidence-driven approach—as we see in ORSA scenario analysis—we need robust data.
And finally, data is allowing for better innovation, and EIOPA supports this in various fora, for example, through the European Forum for Innovation Facilitators, but also by exploring the possibility of collaborating with the EU Space Programme Agency on the use of satellite data for better catastrophe supervision, or by engaging on impact underwriting with startups.
Stress testing – Fit for 55
With that in mind, I would like to turn to the final topic of my remarks today before I take your questions and that is, the importance of stress testing.
EIOPA conducts qualitative and quantitative assessments in the form of stress tests on climate-related risks pertaining to the insurance and pensions sectors. In 2018 EIOPA introduced a nat-cat based scenario in its EU-wide insurance stress test. In 2020, we published the sensitivity analysis of climate-change related transition risks. And in 2022, we published the study on the European insurers’ exposure to physical climate change risks and ran the first EU-wide climate stress test for the occupational pensions sector.
And last year, EIOPA completed the first EU-wide cross-sectoral stress test. We did this in collaboration with our fellow European Supervisory Authorities, ESMA and EBA, the ECB, and ESRB. The stress test was top-down, meaning we did not request any data or input from industry but worked with the data we have.
The "Fit-for-55" stress test looks at how transition risks interact with broader financial stresses, helping us understand not only direct impacts, but also how risks might cascade through the financial system.
You will hear more about the results of this stress test this afternoon. What I would like to highlight here is that this approach, and the findings truly show the importance of a coordinated approach. No financial sector can remain isolated from climate risks when they materialize elsewhere in the system, and no single sector can finance the green transition alone. And so we must work together.
Conclusion
Looking ahead, our path is challenging but clear: the impact of natcat events is on the rise and we need to adapt our response to it. The initiatives I have outlined today—from addressing protection gaps to enhancing regulatory frameworks and conducting forward-looking stress tests—are examples of concrete actions that contribute to a more resilient financial system in the face of climate change.
And as I have said, EIOPA remains committed to fostering collaboration across public and private sectors. Europe has shown leadership in sustainable finance, and we must continue to drive both resilience and meaningful action forward.
I wish you engaging and fruitful discussions today and encourage you all to engage actively, share your perspectives, ask questions, think outside the box.
Thank you for your attention.
Details
- Publication date
- 13 March 2025