The European Insurance and Occupational Pensions Authority (EIOPA) published a Consultation Paper on the Opinion on sustainability claims and greenwashing in the insurance and pensions sectors seeking to provide “guidance to competent authorities on how to identify misleading sustainability claims and monitor greenwashing throughout the insurance and pensions lifecycle.” EIOPA’s draft Opinion sets out four principles for insurance and pension providers to follow in making sustainability claims:
- Principle 1: Sustainability claims made by a provider should be accurate, precise, and consistent with the provider’s overall profile and business model, or the profile of its product(s).
- Principle 2: Sustainability claims should be kept up to date, and any changes should be disclosed in a timely manner and with a clear rationale.
- Principle 3: Sustainability claims should be substantiated with clear reasoning and facts.
- Principle 4: Sustainability claims and their substantiation should be accessible by the targeted stakeholders.
A series of example good and bad practices is listed under Principles 1 and 2. One notable “bad practice” is paragraph 3.30, which is a pretty direct swipe at insurers who left the Net Zero Insurance Alliance without making public statements about the departure:
“An insurance provider joined an alliance that pledged to transition its underwriting portfolio to Net Zero emissions by 2050. After joining the alliance, this provider uses it to portray itself via various marketing channels such as advertisements and non-regulatory disclosure as a ‘green’ provider. However, a few years after joining the provider decides to leave the alliance. After its departure, the provider did not issue a public statement on its website highlighting its departure from the alliance and the reasons for this departure. It also does not indicate whether its sustainability ambitions have changed, nor if it will continue to pursue on an individual basis the net zero commitments it has previously made. Instead, the website of this provider still has articles related to its membership in the alliance.”
Even though this is a draft and specific to EU insurers and pensions, it would be prudent to view this as an omen of things to come more broadly. Joining climate or sustainability alliances to begin with shouldn’t be a knee-jerk PR reaction; instead, the decision must be carefully thought out taking into account a range of risks and considerations. Withdrawals similarly can’t be taken lightly. Companies pulling out of alliances should indeed communicate such decisions clearly and publicly with specific reasons. Otherwise, detractors – and customers – will form their own opinions and judgements.
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