Article 1 · Commission Delegated Regulation (EU) 2021/1256

Contents

Article 1Amendments to Delegated Regulation (EU) 2015/35#

Delegated Regulation (EU) 2015/35 is amended as follows:

(1)in Article 1, the following points 55c to 55e are inserted:

55c.“sustainability risk” means an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential negative impact on the value of the investment or on the value of the liability;

55d.“sustainability factors” means sustainability factors as defined in Article 2, point (24), of Regulation (EU) 2019/2088 of the European Parliament and of the Council^note;

55e.“sustainability preferences” means a customer’s or potential customer’s choice as to whether and, if so, to what extent, one or more of the following financial instruments should be integrated into his or her investment:

(a)a financial instrument for which the customer or potential customer determines that a minimum proportion shall be invested in environmentally sustainable investments as defined in Article 2, point (1), of Regulation (EU) 2020/852 of the European Parliament and of the Council^note;

(b)a financial instrument for which the customer or potential customer determines that a minimum proportion shall be invested in sustainable investments as defined in Article 2, point (17), of Regulation (EU) 2019/2088;

(c)a financial instrument that considers principal adverse impacts on sustainability factors where qualitative or quantitative elements demonstrating that consideration are determined by the customer or potential customer;

(2)Article 260 is amended as follows:

(a)in paragraph 1, point (a), point (i) is replaced by the following:

(i)actions to be taken by the insurance or reinsurance undertaking to assess and manage the risk of loss or of adverse change in the values of insurance and reinsurance liabilities, resulting from inadequate pricing and provisioning assumptions due to internal or external factors, including sustainability risks;’;

(b)in paragraph 1, point (c), the following point (vi) is added:

(vi)actions to be taken by the insurance or reinsurance undertaking to ensure that sustainability risks relating to the investment portfolio are properly identified, assessed and managed.’;

(c)the following paragraph 1a is inserted:‘1a.The insurance and reinsurance undertakings shall integrate in their policies referred to in points (a) and (c) of paragraph 1, and where relevant, policies on the other areas referred to in paragraph 1, sustainability risks.’;

(3)Article 269 is amended as follows:

(a)in paragraph 1, point (e) is replaced by the following:

(e)identifying and assessing emerging risks and sustainability risks.’;

(b)the following paragraph 1a is inserted:‘1a.Emerging risks and sustainability risks as referred to in paragraph 1, point (e), and identified by the risk management function shall form part of the risks referred to in Article 262(1), point (a).’;

(4)in Article 272(6), point (b) is replaced by the following:

(b)the effect of inflation, legal risk, sustainability risks, change in the composition of the undertaking’s portfolio, and of systems which adjust the premiums policy-holders pay upwards or downwards depending on their claims history (bonus-malus systems) or similar systems, implemented in specific homogeneous risk groups;’;

(5)in Article 275, the following paragraph 4 is added:‘4.The remuneration policy shall include information on how it takes into account the integration of sustainability risks in the risk management system.’;

(6)in Chapter IX of Title I, the following Section 6 is added:‘SECTION 6InvestmentsArticle 275aIntegration of sustainability risks in the prudent person principle1.When identifying, measuring, monitoring, managing, controlling, reporting and assessing risks arising from investments, as referred to in the first subparagraph of Article 132(2) of Directive 2009/138/EC, insurance and reinsurance undertakings shall take into account sustainability risks.2.For the purpose of paragraph 1, insurance and reinsurance undertakings shall take into account the potential long-term impact of their investment strategy and decisions on sustainability factors and, where relevant, that strategy and those decisions of an insurance undertaking shall reflect the sustainability preferences of its customers taken into account in the product approval process referred to in Article 4 of Commission Delegated Regulation (EU) 2017/2358^note.