In its response Finance Watch supported the proposal to explicitly include the management of sustainability risk under the general risk management function in the Solvency II delegated acts. It also noted that the delegated acts should include an explicit definition of sustainability risk. This is needed in order to clarify that for the purpose of Solvency II, sustainability risks refer to the environmental, social and governance (ESG) factors which are deemed to be financially material. Finance Watch supported the proposed reference to sustainability risks under the investment as well as the underwriting and reserving risk management policy. However, it believes that the requirements to integrate sustainability risks and notably climate related risks should be further detailed in the delegated acts.
Finance Watch indicated that more legal clarity was needed to ensure that insurance intermediaries and insurance undertaking proactively assess the customer ESG objectives. It also highlighted that if EU standards for ESG financial products and a certification process, it will not be possible to improve the customer trust in sustainable products.