EIOPA welcomes SII proposals from EC on sustainability

Written by Adam Cadle

18/10/2021

EIOPA has welcomed the Solvency II proposals of the European Commission (EC) to give mandates to the independent advisory body for further action on sustainable finance.

It is convinced that these proposals would contribute “positively” to a transition into a mode sustainable economy and that insurers, in their role as investors and risk managers, can facilitate that.

In particular, EIOPA welcomed the two mandates proposed by the EC regarding sustainability risks. EIOPA believes that it is important to explore prudential treatment of exposures related to assets or activities associated substantially with environmental or social objectives. Furthermore, a regular review of the scope and the calibration of parameters of the standard formula pertaining to natural catastrophe risk is an important step towards a more sustainable framework.

EIOPA said it is also pleased about the inclusion of climate change scenarios in the Own Risk and Solvency Assessment (ORSA), which reflects EIOPA’s opinion earlier in 2021. EIOPA considers it essential to foster a forward-looking management of climate-related physical and transition risks to ensure the long-term solvency and viability of the industry.

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