Insurance Europe is calling for revisions to the EU’s Taxonomy Regulation, arguing that certain reporting requirements place an unnecessary burden on insurers without effectively measuring their contributions to sustainability.
In a position paper, the industry group backed efforts to streamline sustainability reporting and disclosures but urged regulators to rethink key performance indicators (KPIs) that are proving difficult to implement. The paper is a response to the European Commission’s consultation on the technical implementation of the regulation, known as Level 2 measures.
The EU Taxonomy aims to define what qualifies as a sustainable investment to direct capital towards green initiatives. However, insurers warn that some of its requirements are impractical and create excessive compliance costs.
One of the concerns is the insurance underwriting KPI, which tracks the share of insurers’ underwriting activities aligned with the taxonomy. Insurance Europe is calling for its removal or suspension, arguing that it adds complexity without delivering meaningful insights into insurers’ sustainability efforts.
Insurance Europe is also questioning the value of the insurance investment KPI, which measures the proportion of insurers’ assets that qualify as sustainable under the taxonomy. The association argued that the metric does not accurately reflect the sector’s role in sustainable finance and is placing an unnecessary administrative burden on firms. It has proposed suspending the KPI until a full review determines whether it provides any practical benefit.
To simplify compliance, Insurance Europe is advocating for a 10% materiality filter that would exclude companies with fewer than 1,000 employees from the denominator when calculating investment KPIs. It is also calling for streamlined reporting templates, particularly for disclosures related to performance metrics and exposure to fossil gas and nuclear energy activities.
The EU Taxonomy is a central part of the bloc’s sustainable finance framework, designed to channel investments into environmentally friendly projects. But as the European Commission works to refine the regulation, concerns are growing across the financial sector about the complexity and feasibility of some of its reporting obligations.
Insurance Europe’s proposals reflect broader industry frustrations over regulatory red tape and the challenge of aligning financial activities with evolving sustainability standards. The group is urging policymakers to ensure reporting requirements remain proportionate and do not hinder insurers’ ability to support the green transition.
