N° 156 : Energy and Climate Law: Insurers shall carry on making progress

The ACPR is responsible for ensuring compliance with the provisions set out in these regulations and for ensuring that the information provided by institutions is clear, accurate and non-misleading. The report relies on an analysis of the compliance of the topics covered in the reports published by insurers pursuant to Article 29 of the Energy and Climate Law, and of the relevance of their content. The study compares reports published in 2022 and 2023 where possible.

The aim is to improve future publications by clarifying the ACPR’s expectations, while also warning readers about possible limits regarding the content of reports published by insurers.

The concerned undertakings most often published the report required by Article 29 of the Energy and Climate Law. The content of these reports is very heterogeneous and none of them fully complies with regulatory requirements, in terms of either completeness, accuracy or precision of the information published. There was an improvement in 2023 compared with 2022, but heterogeneity also increased. Some undertakings continued to develop and deepen their analyses, while others merely updated the figures provided the previous year.

Generally speaking, the reports are more detailed on the scope used to calculate the indicators presented or on the construction of these indicators. Such clarifications are essential for the reader to fully understand the scope of the information available: the presentation of data on a limited scope that is not clearly defined and not representative of the insurer’s business may be considered potentially misleading (e.g., disclosure of information is necessary both for the euro fund and for unit-linked products).

In addition, the ACPR established, by way of instructions, a standard plan for 29LEC reports made by insurers. This plan was not always followed, which hindered the comparability of the reports.

Another major factor is that a significant share of undertakings did not publish or submit the report to the ACPR within the regulatory deadlines. The majority of these delays seem to be due to a lack of understanding or knowledge of the regulations. In particular, undertakings must publish their reports on their websites and send them to both ADEME and the ACPR. Needless to say, the reports published and transmitted to the authority are expected to be identical.

The findings regarding the information to be provided by undertakings falling within the scope of the European SFDR are similar: none of the reports presented the complete set of information required, which is sometimes incomplete in order to reflect a true and fair view of the actions taken by insurers. In particular, the main negative impacts on sustainability factors are supplemented but the associated explanations required by the regulation are not very detailed or even absent.

These new disclosure requirements need to be seen in a broader context of considering sustainability risk in the governance and risk management of insurers, as required by Delegated Regulation (EU) 2015/35 (Solvency II) since 2 August 2022. For example, the lack of information on topics related to governance and risk management practices in the 29LEC reports may raise questions as to whether insurers are properly applying their prudential obligations. Similarly, consistency between data disclosed to the public and data provided to the supervisory authority in the context of prudential supervision (list of assets, ORSA processes, etc.) is essential, particularly if discrepancies lead to a more advantageous view of the entity’s practices being made public.