Insurance Europe: Insurers support EC’s work on social taxonomy, but focus must be finalisation of climate-related taxonomy

13 September 2021

Insurance Europe has responded to a consultation by the European Commission on a draft report by its Platform on Sustainable Finance on a social taxonomy.

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While the European insurance industry is supportive of the future establishment of a social taxonomy, the EC should only begin working on such a taxonomy once more progress has been made with respect to the climate-related taxonomy, due to the extreme urgency of climate-related action and the challenge of developing the climate taxonomy. 

While the social aspect is fundamental to sustainability, the EC should prioritise the identification of “significant harm” in terms of the social component. This will facilitate the identification of environmental measures with negative social impacts. 

This considered, the EC should focus on developing an efficient tool for investors. This means that:

• It is important to ensure that the transition to a more sustainable and resilient economy and society is done in a just and inclusive manner. The development of a social taxonomy should therefore also initially focus on the just transition aspect. 
• The work of the Platform on Sustainable Finance on minimum social safeguards in the context of the environmental taxonomy should take priority over the social taxonomy, as it will provide a clear indication on future needs in terms of the social taxonomy.  
• A cost-benefit analysis is needed to identify what framework would be most suitable from the investment perspective and to limit its complexity level.  
• It is also crucial to avoid overlapping EU legislation on social and environmental criteria, as it could lead to additional burdens and complexity for Taxonomy users. More broadly, it is important to account for existing initiatives and upcoming legislation on sustainable finance (including measures on sustainable corporate governance, the Corporate Sustainability Reporting Directive (CSRD), the Sustainable Finance Disclosure Regulation (SFDR) and work by the European Financial Reporting Advisory Group (EFRAG) on sustainability standards) and to avoid complexity/legal uncertainty.

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