(Only in Italian)
The results show that firms and banks clearly benefit from adopting green policies early on to foster the transition to a zero-carbon economy.
Climate risk includes both physical risk and transition risk. Physical risk is the economic impact of an expected increase in the frequency and magnitude of natural disasters. In Europe, physical risks are unevenly distributed, with northern regions being more prone to floods and southern regions more exposed to heat stress and wildfires. Transition risk is the cost of introducing policies to reduce CO2 emissions, particularly for certain high-emitting industries. For example, carbon-intense industries, such as mining or electricity, would incur considerable costs to reduce CO2 emissions, which would increase their probability of default over the short to medium term.
Stress tests show that the benefits of early action exceed the initial costs in the medium and long term.
The review also aims to make the insurance and reinsurance (i.e. insurance for insurance companies) sector more resilient so that it can weather future crises and better protect policyholders. Moreover, simplified and more proportionate rules will be introduced for certain smaller insurance companies.
Today’s review consists of the following elements:
- a legislative proposal to amend the Solvency II Directive (Directive 2009/138/EC);
- a Communication on the review of the Solvency II Directive;
- a legislative proposal for a new Insurance Recovery and Resolution Directive.
The aim of the revision is to strengthen the contribution of European insurers to financing the recovery, completing the Capital Markets Union and channelling funds towards the European Green Deal.