EIOPA Consults on KPIs on Sustainability for Non-Financial Reporting
EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios. Through this consultation, EIOPA is responding to a Call for Advice addressed to the three ESAs, to support EC in developing the definitions and methodologies to be used for the disclosure requirements stemming from the Taxonomy Regulation. The public consultation closes on January 12, 2021, with the EIOPA expecting to finalize its advice and submit to EC in February 2021.
EIOPA seeks feedback and comments on the proposed ratios as well as the potential alternative measures, the necessary disclosures around the approaches taken, methodologies used, and the expected impact of the future mandatory disclosures. In this consultation, EIOPA is considering whether the mandatory ratios of non-financial undertakings, as set out in the Taxonomy Regulation, are relevant and appropriate to depict insurance and reinsurance activities or whether they need to be translated to the most appropriate and comparable key performance indicators for insurance and reinsurance businesses. EIOPA suggests requiring two most relevant key performance indicators on sustainability that depict the extent to which an insurer or reinsurer conducts taxonomy-relevant activities in relation to non-life gross premiums written and helps in funding taxonomy-related activities in relation to total assets
The Call for Advice had requested EIOPA to develop the relevant ratios to be mandatorily disclosed by the insurance undertakings falling within the scope of the Non-Financial Reporting Directive. This consultation paper presents the related EIOPA advice regarding Article 8 of the Taxonomy Regulation, which specifies the ratios that have to be depicted by non-financial undertakings. EIOPA is considering whether the mandatory ratios of non-financial undertakings, as set out by Article 8 of the Taxonomy Regulation, are relevant and appropriate to depict insurance and reinsurance activities or whether they need to be "translated" to the most appropriate and comparable key performance indicators for insurance and reinsurance businesses. For that, the Call for Advice further specified three insurance-specific ratios as a possible starting point: proportion of total assets invested in taxonomy-compliant economic activities; proportion of total non-life insurance underwriting exposure associated with taxonomy activities; and proportion of total reinsurance underwriting exposure associated with taxonomy activities. This consultation paper is part of the broader sustainability agenda of EIOPA to integrate environmental, social, and governance risk assessment in the regulatory and supervisory framework.
Related Links
Comment Due Date: January 12, 2021
Keywords: Europe, EU, Insurance, Reporting, Disclosures, NFRD, Taxonomy Regulation, Climate Change Risk, ESG, Sustainable Finance, EIOPA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Related Articles
EBA Finalizes Remuneration Standards for Investment Firms in EU
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
ECA Recommends Actions to Enhance Resolution Planning for Banks
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE Publishes Key Elements of the 2021 Stress Testing for Banks in UK
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA Proposes Rules on Identity Verification of Depositor Protection
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB Publishes Work Program for 2021
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA Issues Update on Move to New Data Collection Platform
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank Publishes Derivation Rules for Reporting by Banks
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED Revises Capital Planning and Stress Testing Requirements for Banks
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB Releases Results of Bank Lending Survey for Fourth Quarter of 2020
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs Publish Reporting Templates for Financial Conglomerates
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.
