EU urged to use 2023 to drive green and digital transition

European risk managers have issued a plea to the European Union to put sustainability at the top of its priority list in the year ahead.

The Federation of European Risk Management Associations (FERMA) has called on the incoming Spanish Presidency of the Council of the European Union to make progress on the green and digital transitions a priority to help bolster EU competitiveness and enhance strategic autonomy.

It has produced a new report which says that action must be taken if the EU is to ensure the ongoing effectiveness and affordability of the private (re)insurance market.

Its paper “Contribution to the Spanish Presidency of the Council of the EU – ‘Europe, closer’: what does this mean for Risk Managers?”, calls for definitive action on several legislative fronts, including the Directive on corporate sustainability due diligence (CS3D) and Solvency II, as well as addressing the need for adequate insurance coverage to facilitate the transition to a low-carbon economy and for greater collaboration on cyber resilience.

The Spanish Presidency, which began at the start of July to 31 December 2023, takes place during an important period for EU policymaking as 2024 will see the EU elections take place.

Commenting on the paper, Dirk Wegener, (pic) President of FERMA, said: “FERMA looks forward to engaging with the Spanish Presidency during this critical period. The risk management community has a central role to play in advancing developments on all of these critical fronts and contributing to the continued competitiveness of the European market.”

Considering the risk manager in the context of the programme of the Spanish Presidency, the FERMA paper addresses three key areas:

  • Advancing the green transition
  • Ensuring the EU’s open strategic autonomy – with a digital focus
  • The key role of insurance management in supporting the transition.

FERMA said it supports the ambitions of CS3D and the need for companies to address environmental and human rights impacts in their supply chains, but the paper underlines the importance of cementing a risk-based approach at the heart of the rules, which would enable companies to prioritise activities on these fronts. It believes this is important to ensuring Europe continues to play a lead role in facilitating the move to a low-carbon economy while remaining competitive.

The paper stated: “To support the green transition, and to meaningfully combat the effects of climate change, FERMA advocates a more risk-based approach to value-chain due diligence aligned with international standards.”

The document also highlighted the need for “affordable and adequate insurance coverage” to support organisations in their transition efforts and spotlights the importance of closing the growing protection gaps on this front.

“FERMA is concerned that the private (re)insurance market is not offering sufficiently innovative, affordable or competitive risk transfer solutions,” it added.

On Solvency II, FERMA has urged the EU to adopt a more proportionate framework, which it adds “would ultimately give captive (re)insurance undertakings the status of low-risk profile undertakings, which would help give enterprises in the EU more options for their risk-transfer strategies.”

As discussions around the proposed Cyber Resilience Act continue, FERMA called upon the presidency to achieve political consensus on the legislation, stating: “For risk managers, the ethos of ‘cyber security by design’ in legislation is a positive and necessary development.” However, it added: “We are mindful of the possible ramifications such a piece of legislation might have on the insurance coverage options for enterprises” and highlights the challenge of ensuring product availability that meets the risk needs of buyers.

FERMA also highlighted the findings of its recent joint report Cyber Insurance Dialogue: How Europe can lead the way to cyber resilience and urges the presidency to consider an annual cyber resilience summit involving all key stakeholders.

Juan Carlos López Porcel, President, AGERS, added: “AGERS believes that through close collaboration between the FERMA the risk management community and the EU Spanish presidency can play a central role in supporting the council in achieving many of its risk and resilience-focused ambitions. We firmly believe that the areas that FERMA is focused on will help to ensure a more robust and relevant supply chain for governments and businesses to the benefit of the EU as a whole.”

Daniel San Millán, President, IGREA, concluded: “The commencement of the Spanish Presidency of the Council of the EU is clearly an important and exciting development for IGREA. We view the risk priorities that FERMA has urged the Council to address as critical not only from a risk management perspective but for the overall competitiveness of the EU. We fully believe that these areas are fundamental to ensuring that Europe remains a highly conducive and productive business environment.”