Insurance Sweden sets out requirements to further contribute to climate commitments

Swedish insurance and occupational pensions association, Insurance Sweden, has set out five elements that it thinks should be achieved to further contribute to overcoming the climate challenge.

It noted that insurers and occupational pension providers are big contributors to sustainable investments but it stressed that the supply of sustainable investments must increase. Therefore, Insurance Sweden has called on the business community and governments to take measures to create more sustainable projects.

“From an investor perspective, some projects may be too risky for a private investor to contribute capital. In these cases, it is valuable if the state can step in and remove some of the risk from the private investors through state risk sharing,” it stated.

It also think that the European Commission’s review into Solvency II needs to focus on removing obstacles to existing long-term investments in the current regulatory framework, rather than introducing additional rules that risk leading to an increase in the capital requirement. However, it highlighted that financial regulation can only be a complement to direct regulation.

“Most economists agree that the most effective measure to achieve climate neutrality is a sufficiently high price of carbon dioxide, preferably at a global level. Financial regulation, on the other hand, can only have an indirect effect. Although the insurance and occupational pension industry is fundamentally positive about the European Commission's investment in sustainable finances, it is important to remember that financial regulation can never replace direct regulation and that work must therefore continue in other areas as well,” it stated.

Insurance Sweden believes another important aspect is meeting the consumer perspective. It said that several of the current regulations in the financial market area are aimed at the financial companies' duty to provide information to customers.

“Although insurance and occupational pension companies are largely positive about the new legal rules, the industry is disappointed that the rules did not become as customer-friendly as the industry had hoped for.”

Finally, the association has called for the financial industry to have access to data in order to fulfil its obligations. “It is important that the business community's reporting of sustainability information is improved,” it concluded.

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