Insurance policyholders, personal pensions savers and scheme members are increasingly interested in environmental and/or social factors.
Given this rising interest, insurance and pension providers have increased their offer of sustainable products and schemes and made their offer and business models more sustainable.
However, issues arise when insurers or pension providers misleadingly portray themselves, their products or schemes as sustainable by making claims about environmental or social benefits.
In this section we look at what greenwashing is, how it can take place and what impact it can have on consumers.
What is greenwashing?
Greenwashing is a practice whereby sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services.
This practice may be misleading to consumers, investors, or to other market participants.
Where does greenwashing occur in the insurance and pension sectors?
Greenwashing is a complex and multifaceted issue.
It can occur at all stages of the insurance and pensions lifecycle:
- at entity level, in the product manufacturing, in delivery and management of insurance policies
- in the design, delivery and management of pension schemes
How can greenwashing impact you?
Greenwashing:
- Can deceive consumers into buying products that are not aligned with their preferences
- Can deceive consumers into buying products from a pension or insurance provider that misleadingly portrays itself as an entity with sustainability credentials
- Can erode consumers’ trust in the ability of insurers or pension providers to positively impact environmental or social factors
- Misleading sustainability claims do not allow consumers as well as the society to hold providers accountable for their environmental and social impact
What do consumers think about sustainability claims made by insurance undertakings or distributors?
The EU-wide Eurobarometer survey carried out by EIOPA in June 2022 shows that 62% of EU consumers do not trust the sustainability claims made by insurance undertakings or distributors, while a similar percentage (63%) says that sustainability claims about insurance products are often misleading.
Further reading
- EIOPA's advice to the European Commission on Greenwashing
- Greenwashing: of the barriers to the transition, Eurofi magazine article