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The EU sustainable finance taxonomy from the perspective of the insurance and reinsurance sector

Author

Listed:
  • Marie Scholer

    (EIOPA)

  • Lazaro Cuesta Barbera

    (EIOPA)

Abstract

This article investigates how much investment held by insurers may be eligible to the EU sustainable finance taxonomy. To this aim, Solvency II item-by-item investment data is employed. As part of the Green Deal, the Commission presented the European Green Deal Investment Plan, which will mobilize at least €1 trillion of sustainable investments over the next decade. Our results suggest that currently only a small portion of the insurer’s investments are made in economic activities which might be eligible to the EU sustainable finance taxonomy as the insurer’s exposures are mainly concentrating toward financial activities. On one hand, this can be interpreted as an indicator of limited exposure to transition risk for the insurance sector but on the other hand also indicates that insurers have the possibility to contribute more significantly to transitioning to a lower carbon society in the future. As major long-term investors, insurers could play a key role in the transition towards more sustainable society. In this respect, the taxonomy can help insurers by providing clarity in identifying sustainable economic activities and avoiding reputational risks.

Suggested Citation

  • Marie Scholer & Lazaro Cuesta Barbera, 2020. "The EU sustainable finance taxonomy from the perspective of the insurance and reinsurance sector," EIOPA Financial Stability Report - Thematic Articles 17, EIOPA, Risks and Financial Stability Department.
    • Handle: RePEc:eio:thafsr:17
    as

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    File URL: https://www.eiopa.europa.eu/sites/default/files/financial_stability/20203310_thematic-article-eu-sustainable-finance-taxonomy.pdf
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    References listed on IDEAS

    as
    1. Michele Siri & Shanshan Zhu, 2019. "Will the EU Commission Successfully Integrate Sustainability Risks and Factors in the Investor Protection Regime? A Research Agenda," Sustainability, MDPI, vol. 11(22), pages 1-23, November.
    2. Stefano Battiston & Antoine Mandel & Irene Monasterolo & Franziska Schütze & Gabriele Visentin, 2017. "A climate stress-test of the financial system," Nature Climate Change, Nature, vol. 7(4), pages 283-288, April.
    3. Stefano Battiston & Petr Jakubik & Irene Monasterolo & Keywan Riahi & Bas van Ruijven, 2019. "Climate Risk Assessment of the Sovereign Bond Portfolio of European Insurers," EIOPA Financial Stability Report - Thematic Articles 15, EIOPA, Risks and Financial Stability Department.
    4. Dirk Schoenmaker, 2018. "Sustainable investing- How to do it," Policy Contributions 28553, Bruegel.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    insurance; sutainable finance; green taxonomy;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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