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Insurance regulators are keen to ensure their prudential frameworks properly incorporate climate risk. But whether this should be reflected in capital requirements is proving a difficult question to answer, as Christopher Cundy reports

The International Sustainability Standards Board has launched a consultation on the issue

Climate risks should be explicitly dealt with in the pillar 1 (capital requirements) element of Solvency II insurance regulation, not left to pillar 2 (risk management), MEPs have been told.

While insurers want policy makers' help to tackle climate change, they have been told not to wait for regulation to act. Meanwhile, climate activists have urged regulators and legislators to step in, as they have no confidence in the industry's ambitions

Lower capital charges for sustainable assets is going to be "an important debate, at least from a political perspective", in the Solvency II review, according to Didier Millerot, head of the European Commission's insurance and pensions unit

Proposed standard will facilitate investors' trust in the green bond market, lobby group said