Insurance Europe, the European insurance and reinsurance federation, has responded to the European Supervisory Authorities’ call for evidence on ‘greenwashing’, saying that time and further regulatory clarification is needed to address this risk.
‘Greenwashing’ refers to misleading claims around sustainability-related statements and products, and has become a growing issue for re/insurance alongside the increasing focus on ESG.
Insurance Europe notes that greenwashing can occur at an entity, product or service level and is not necessarily intentional, as it can also stem from negligence or misinterpretation.
However, the federation does not feel that any new regulation is needed to combat this risk, as it believes established rules “already protect customers from unclear or misleading claims including on sustainability-related characteristics.”
“Insurers operate in a highly regulated environment in relation to sustainability claims, transparency and the implementation of robust processes and controls. If designed correctly, and putting aside the data and timetable or sequencing problems, ultimately, legislations under the EU sustainable finance framework have the potential to address greenwashing,” Insurance Europe explained.
“However, a significant part of the framework intended to prevent greenwashing is not yet fully in place and further clarification, coherence and guidance are needed to deliver on sustainable objectives.”
Among the issues in the EU sustainable finance regulatory framework that could currently lead to unintentionally flawed information, Insurance Europe flagged a lack of clarity and inconsistencies in certain rules, as well as the multiplication and sometimes contradicting definitions of what ‘green’ is.
Other issues to address before new regulations are considered include a lack of data and a lack of maturity of methodologies and metrics for measuring impacts on sustainability factors, it added.