The recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) should remain voluntary, Insurance Europe has said.
The lobby group's comment came in response to a paper released by the International Association of Insurance Supervisors (IAIS) on the implementation of the TCFD recommendations.
Based on a survey of nearly 1,200 insurers, the IAIS found only 15-20% of surveyed insurers worldwide have made plans to, or are already taking steps to, implement the recommendations.
The IAIS paper also reported a wide dispersion on climate-related disclosure between insurers, which led to the IAIS to conclude a purely voluntary approach may not yield disclosures of the quality and scope necessary to inform investors' decisions.
In response, Insurance Europe said insurers are fully aware of their responsibility for sustainable development and are willing to take voluntary steps towards disclosure. It also called for a flexible approach (e.g., guiding principles) rather than a prescriptive approach from supervisors.
"This would allow insurers to embed sustainability considerations more easily in their business operations in line with their company-specific characteristics," Insurance Europe said.
The IAIS paper said while the TCFD recommendations are voluntary, supervisors may refer to requirements in insurance core principles (ICP) 20 to encourage insurers to increase climate-related risk disclosures.
Insurance Europe said: "Supervisors' efforts to encourage insurers to make climate-risk disclosures in line with ICP 20 are supported, provided that TCFD recommendations remain voluntary and do not become an informal layer of duplicative disclosures on top of existing regulatory disclosures and tools already available in a given jurisdiction to deal with climate-related risks, e.g. with respect to the governance, actuarial and risk management functions."
Insurance Europe's full response can be found here.
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