The European Central Bank also published its biannual Financial Stability Review on Wednesday. The report observes that “A rapid deepening of green financial markets continues, but greenwashing risks warrant monitoring.”
The ECB says these greenwashing concerns “need to be tackled through better information, especially in relation to forward-looking commitments and plans, and enhanced standards, both to ensure that green finance effectively supports the transition [to a low-carbon economy] and to foster efficient market mechanisms.”
The European Union is working on a replacement for the Non-Financial Reporting Directive that is expected to be adopted in late 2022. The Corporate Sustainability Reporting Directive is expected to cover all large companies in EU member states, and will mandate disclosure according to new EU sustainability reporting standards.
The CSRD will also mandate third-party assurance of businesses’ sustainability data.
Insurers
A new report from BlackRock finds that “insurers are increasingly concerned about the implications of climate risk, with 95% of executives confirming it will have a significant impact on portfolio construction over the next two years.”
“Nearly half of respondents confirmed they have turned down an investment opportunity over the past 12 months due to ESG concerns.”
The study also finds that insurance companies are diversifying into high-risk, high-yield assets, with “60% of insurers expecting to increase their investment risk exposure over the next two years.” In particular, insurers expect their average private-market allocations to increase over the next two years.
