Pensionskassen will take on a key role in the structural change towards a climate-neutral economy. As institutional investors they may contribute significantly to reducing the impact of climate change and to make the transition to a more sustainable and more resilient economy. By integrating sustainability aspects in relation to Environmental, Social and Governance (ESG) factors into the regulatory and supervisory legal frameworks, capital flows should now accordingly be diverted towards sustainable investments in accordance with the European Commission’s Action Plan on Sustainable Finance and the Green Deal, and measures pushed for overcoming financial risks arising from climate change, natural catastrophes and social problems as well as for promoting transparency and long-term thinking in financial and economic activities.
The regulatory framework should be amended to implement the European Commission’s Action Plan on Sustainable Finance as follows:
- The Disclosure Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector
- The Benchmark Regulation (EU) 2019/2089 – amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks
- The Taxonomy Regulation (EU) 2020/852 – on the establishment of a framework to facilitate sustainable investment
While accompanying supervised entities in the transition process, the FMA has set the strategic framework conditions, has intensified the dialogue with the insurance undertakings and set the following priorities:
- Asset Screenings: since 2019, the FMA has been conducting various analyses of the transitional risks in investment, in order to identify those assets in the portfolios that would be exposed to potentially higher fluctuations in price during a transition to a more CO2-neutral economy. Furthermore, the share and corporate bond portfolios are valued and analysed under different transition scenarios with regard to the decarbonisation of the economy, to what extent companies in which the Pensionskassen invest, must reduce their CO2 emissions, in order to achieve a path that conforms with the Paris climate objectives.
- Climate stress test: The FMA regularly conducts stress tests to analyse the risks and vulnerabilities in the Pensionskassen sector especially with regard to the current economic climate as well as for assessing the risk capacity of the individual undertakings. For this purpose, the FMA also examines the impacts of future climate policy, the advent of low-carbon technologies, the economy’s level of adaptation or the occurrence of extreme events.
- ESG Dialogue: in accompanying insurance undertakings in the transition process in order to achieve the objectives of the European “Green Deal” the FMA has intensified its dialogue with the industry, in order to inform the insurers as early as possible about the current developments, the FMA’s initiatives and the results of the asset screenings.