IDD (Insurance Distribution Directive)

ESG
:   
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March 1, 2024

The IDD is about setting EU-wide rules for selling insurance products. It came into effect in October 2018 and focuses on:

  1. Consumer Protection: Just like MiFID II, the IDD is designed to protect consumers. It makes sure that insurance sellers provide clear and understandable information about the products they offer.
  2. Professional Requirements: People who sell insurance need to meet certain professional standards. This includes having the right knowledge and skills to advise customers properly.
  3. Cross-Border Sales: The IDD makes it easier for insurance products to be sold across EU countries, helping to create a single market for insurance.
  4. Transparency and Conduct: Sellers must be transparent about the costs and details of insurance products, and they must act in the best interest of their clients.
IDD Detail

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Green Washing

Greenwashing is the practice of making false or misleading claims about the environmental benefits or sustainability of a product, service, or company. This can include exaggerating or fabricating a product's eco-friendliness, hiding its negative environmental impacts, or making unsubstantiated claims about its sustainability.
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Measuring Double Materiality: Focus on Water Impact

Hypothetical beverage company called "FreshDrink Co." Financial materiality (impact on the company): Climate change is causing water scarcity in regions where FreshDrink Co. sources its water. This scarcity could lead to increased water costs and potential supply disruptions, directly affecting the company's financial performance and long-term viability. Environmental and social materiality (impact of the company): FreshDrink Co.'s water usage in water-stressed areas may deplete local water resources, affecting the surrounding ecosystems and communities' access to clean water.
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Measuring Double Materiality: Focus on Social Impact

Social impact in the context of double materiality refers to how a company’s operations affect people and communities. This includes direct and indirect consequences of business activities on employees, consumers, local communities, and society at large.
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Measuring Double Materiality: Focus on Governance Impact

Governance impact in the context of double materiality focuses on how a company’s governance structures influence both its financial performance and its broader societal impact. This approach requires organizations to evaluate both how governance practices affect their bottom line and how they impact stakeholders such as employees, shareholders, and the community.
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Double Materiality

Double materiality suggests that companies should assess the impact of external environmental and social factors on their operations (external materiality) and evaluate the impact of their activities on the external environment and society (internal materiality).
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2020 UK Stewardship Code

The responsible allocation, management, and oversight of capital to create long-term value for clients and beneficiaries, leading to sustainable benefits for the economy, the environment, and society