EC corporate governance proposals must account for existing EU sustainability rules , Insurance Europe argues

Written by Adam Cadle

10/02/2021

The European Commission (EC) must strike the right balance between the benefit of greater transparency and the burden it would impose on companies if it decided to establish an EU-level legal framework for sustainable corporate governance.

In its response to the EC’s consultation on sustainable corporate governance, including matters regarding social and human rights, climate change and the environment, Insurance Europe said “such a framework should focus on sectors that are lagging behind in the transition to sustainability and thoroughly consider existing sectorial sustainability rules”.

“For example, insurers are already subject to several requirements to integrate considerations about adverse impacts on human rights and environmental issues into their corporate governance frameworks.”

Furthermore, it added that the Commission should “carefully assess the impact of measures that already cover the integration of sustainability into corporate governance frameworks for the financial sector: eg the Sustainable Finance Disclosure Regulation and proposals to amend the Solvency II framework”.

“This sectoral legislation is currently ignored in the Commission’s studies in this area, which risks creating inconsistency and overlaps, especially with initiatives related to the 2018 Action Plan on Sustainable Finance,” it underlined.

In addition, Insurance Europe said the EC should recognise there is no "one size fits all" solution: eg in terms of stakeholder engagement and remuneration.

“The proposed approach to due diligence should be principles-based and risk-based, as well as proportionate and context-specific. Work must also be done to address sustainability through a global approach and international coordination.”

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