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The Renewed Sustainable Finance Strategy published by the European Commission on 6 July contains further welcome steps towards advancing the objectives of the European Green Deal and improving the funding of sustainable projects. And the accompanying legislative proposal for an EU Green Bond Standard should facilitate capital flows to green investments and transition projects.
The Strategy and the Standard
are key parts of the Commission’s ambitious European Green Deal to move
Europe to a clean, circular economy and meet its ambitious goals for to
curb climate change.
As Europe’s largest institutional
investor, with €10.4trn of assets under management, the insurance
industry supports measures to facilitate sustainable investment. It
particularly welcomes the actions to finance the path of the real
economy towards sustainability and to facilitate access to transition
finance. In addition, the insurance sector appreciates the renewed
ambition in the development of sustainable finance initiatives and
standards at international level, as this recognises that sustainability
is a global issue.
These policy actions, together with the
wider set of Green Deal initiatives, have the potential to achieve the
increase in attractive sustainable assets that the industry has long
been calling for.
Olav Jones, Insurance Europe’s deputy
director general, commented: “It is important that the link is made
between the Renewed Sustainable Finance Strategy and the review of the
insurance sector’s prudential regulation — Solvency II — that is
currently underway. The Solvency II review must address the regulatory
disincentives to invest long-term and must result in more appropriate
measurement of insurers’ capital requirements so that insurers’ capacity
to invest can increase and the industry can fully contribute to this
Strategy’s laudable goals. And it is vital that the risk-based nature of
the Solvency II framework is maintained when considering potential
actions to embed sustainability risks within it.”
Insurance
Europe also welcomes the Commission’s efforts to stimulate the issuance
of both sovereign and corporate green bonds through the creation of an
EU Green Bond Standard whose core components are standardised at EU
level to safeguard transparency and comparability.
“The EU
Green Bond Standard has the potential to help finance the transition in
Europe and allow investors to invest in green bonds with confidence,”
said Jones. “Insurance Europe also welcomes the fact that the standard
encourages its use by sovereign issuers.”
Insurance Europe will now study the Commission’s proposals in detail.