The European directive on the reporting of sustainability of enterprises (CSRD) redefines transparency requirements for enterprises, including in the insurance sector. This initiative is part of the green pact for Europe, highlighting an increased commitment from enterprises in the carbon transition.
For insurers, who play a key role in managing climate-related risks, this directive imposes new reporting obligations, but also offers an opportunity to strengthen client and investor trust through clear and verifiable communication on environmental and social impacts.
CSRD application timeline (sources: AMF and Climate Seed)
The CSRD introduces the crucial concept of double materiality, which represents a fundamental change in the approach to extra-financial reporting. This principle obliges companies to consider two essential aspects: on the one hand, the material impact, which concerns the effects of the company on the environment, society, and economy; on the other hand, the financial materiality, which encompasses the risks and opportunities related to sustainability that may affect the financial performance of the company. This approach pushes insurers to expand their scope of vigilance, taking into account not only their own financial interests, but also their externalities and their social role in a broad sense.
The ESRS, elaborated by the EFRAG (European Financial Reporting Advisory Group), define the precise content of the information to be published in the context of the CSRD. These standards cover a wide range of topics, organized into several complementary categories. The ESRS transversals establish general principles, address strategy, governance, and impact evaluation. The ESRS environmental focus on critical issues such as climate change, pollution, water and marine resource management, biodiversity preservation, and circular economy. Social aspects are addressed in dedicated ESRS, covering labor, affected communities, and final consumers and users. Finally, governance ESRS attach to ethical business conduct. This comprehensive structure aims to provide a comprehensive image of the sustainable performance of companies.
Different ESRS norms based on reporting obligations (Source: EFRAG)
To comply with the CSRD requirements, insurers will need to collect and analyze data covering environmental, social, and governance dimensions.
On the environmental front, this involves a detailed tracking of greenhouse gas emissions (including scopes 1, 2, and 3), energy consumption with a focus on renewable energy, and the use of resources such as water and raw materials. The impacts on biodiversity and waste management in a circular economy are also part of the attention points.
On the social front, insurers will need to report on their efforts in terms of diversity and inclusion, covering aspects such as gender equality, representation of different age groups, and integration of people with disabilities. Health and safety at work, training and development programs, and respect for human rights throughout the supply chain will also be scrutinized. The community engagement of companies will also be the subject of a detailed report.
In terms of governance, the CSRD requires information on the composition and diversity of board members, policies on remuneration that incorporate ESG criteria, ethics in business and anti-corruption measures. The ESG risk management and the quality of dialogue with stakeholders will also be evaluated.
Specifically for the insurance sector, reporting must address the integration of ESG criteria into subscription policies, the development of sustainable insurance products, and a responsible investment strategy, particularly its alignment with the Paris Agreement. The climate risk management in portfolios and the evaluation of the environmental impact of claims, particularly in domains such as automobiles and steel, will receive particular attention.
Compliance with the CSRD represents a major challenge for insurers in terms of collecting and analyzing data. This involves first setting up robust and reliable systems to gather a wide range of non-financial information, often scattered within the organization or even with external partners. At the same time, insurers must develop relevant and comparable indicators that accurately reflect their ESG performance while allowing for sectoral comparisons.
This transition also requires a significant effort in training teams to understand ESG issues and to use these new data effectively in their decision-making processes. Ensuring the quality and auditability of data is another critical challenge, essential to meet the verification requirements imposed by the CSRD. Finally, integrating these ESG data into the operational and strategic processes of the enterprise may be the most complex challenge, requiring a profound transformation of the corporate culture and management practices.
The CSRD marks an important step towards greater transparency and corporate responsibility in the field of sustainability. For the insurance sector, it represents an opportunity to strengthen its role in the ecological and social transition.
[1] PwC. (2023). CSRD Watch.
[2] (2023). Ordinance No. 2023-1142 of December 6, 2023 on the publication and certification of sustainability and environmental, social, and corporate governance information of commercial companies.
[3] Deloitte. (2024). Insurance CSRD Benchmark 2024.
[4] Ministry of Economy, Finance and Relance. (n.d.). Corporate Sustainability Reporting Directive (CSRD). National RSE Portal.
