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.
Comment Due Date: January 12, 2021
Keywords: Europe, EU, Insurance, Reporting, Disclosures, NFRD, Taxonomy Regulation, Climate Change Risk, ESG, Sustainable Finance, EIOPA
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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