As the demand for sustainable financing and investments grows, regulatory requirements on financial service providers are rapidly evolving. The complexity of the regulatory sustainability framework requires financial undertakings, including (re)insurers, to apply a holistic approach to streamline processes and ensure compliance.
Two significant pieces that require the attention of (re)insurers in Ireland are the Corporate Sustainability Reporting Directive (CSRD) and the Guidance for (Re)insurance Undertaking on Climate Change Risk (Guidance) introduced by the Central Bank of Ireland (CBI). While the CSRD applies in a phased approach and covers sustainability matters across environment, social and governance topics, the Guidance is an immediate ask focusing only on climate risks. The Guidance is a key priority and central requirement of the CBI while we await further updates of the Solvency II Directive with a specific scope on climate change.
Nevertheless, a number of key themes, requirements and tests in Guidance fit into the framework of the CSRD – creating a great opportunity for (re)insurers to look at these processes simultaneously and, as the saying goes, ‘kill two birds with one stone.’
Understanding their individual requirements as well as the key interlinkages between them is a first step to build a robust framework that will stand up to internal audit and regulatory scrutiny.
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This article first appeared in Insurance Ireland and was also contributed to by Alba Boshnjaku, Senior Consultant, Sustainable Finance, EY Ireland.
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