EIOPA has set out the approach it proposes to take to limit the risk of greenwashing in the insurance and occupational pensions sector, floating four principles that should be observed when pension providers make sustainability claims.
The supervisor is consulting on its approach until 12 March. The consultation builds on a progress report on greenwashing from June this year, with EIOPA planning to submit a final proposal to the European Commission by May 2024.
The idea behind the principles set out in its new draft opinion document is to pave the way for a more effective and harmonised supervision of sustainability claims across Europe.
EIOPA said that to make the proposed principles more concrete and to demonstrate how greenwashing can occur in practice, it has compiled examples of good and bad practices for each principle.
It said it proposes that national supervisors monitor providers’ adherence to the principles, evaluate their sustainability claims, ensure compliance with the relevant regulatory requirements and closely examine sustainability-related terms in product names.
In its draft opinion EIOPA defines “providers” as capturing insurance undertakings, providers of pan-European personal pension products, insurance distributors and IORPs.
It said that greenwashing can manifest as part of a broader set of conduct risks at all stages of the insurance and pensions lifecycle and that greenwashing has a substantial impact on both insurance consumers and pension savers as they may be led into buying products that are not aligned with their sustainability preferences.
In all important IORP jurisdictions employees are enrolled automatically and/or mandatorily and in many countries there is also no investment choice for the vast majority of employees. In this sense it is not clear that one can speak of pension funds marketing products to savers.
The four principles that EIOPA has set out to guide anti-greenwashing supervision are:
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.
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