On Dec. 6, HUN CB issued recommendation to domestic insurers.
HUN CB issued recommendation to domestic insurers on identification, management and disclosure of climate change and environmental risks.
Also on enforcement of environmental sustainability aspects during business activities.
Risk Exposure
Recommendation is in line with HUN CB MNB's Green Program, supervision strategy.
As institutional investors, insurers e.g. can also contribute to Hungary's transition to a low carbon, sustainable economy by subscribing to ESG, green (government) bonds.
In addition, they must also recognize the possible harmful environmental effects of their own activities and the sustainability risks associated with their operations.
In order to make strategic, business decisions that account for environmental effects.
Recommendation
Recommendation expects insurers to be able to adequately assess climate change and environmental risks due to restructuring of their corporate governance systems.
Recommended that insurers establish an organizational unit dealing with climate change, environmental risk management and control (ESG center) and/or appoint a responsible manager (sustainability manager) in connection with the topic.
HUN CB expects insurers to develop internal guidelines regulating how assessment and monitoring of climate change-related, environmental risks is integrated into processes.
Must evaluate, in short, medium and at least 10-year term, climate change-related / environmental risks; environmental risks must be taken into account when investing.
Supervisory recommendation regarding disclosure is that insurers disclose material information and key data regarding climate change and environmental risks.
Must also start preparing to comply with legislation regarding publications that have already been announced, but are not yet in force.
Effectiveness
Insurers must apply the recommendation from Jan. 1, 2025.
