Precontractual ESG Disclosure on Insurance-Based Investment Products

Abstract

In the past years, the EU legislature has recognized the significance of transparent disclosure in protecting investors and has acknowledged that social and environmental factors influence investment decisions. Consequently, investments are now also assessed for sustainability, including environmental, social, and governance (ESG) aspects. Insurers, along with other financial market participants, are required to disclose “sustainability risks” regulated by a complex framework, primarily Regulation (EU) 2019/2088, ensuring standardized disclosure. This paper analyzes how insurance companies must implement prior disclosure and transparency on nonfinancial risks, focusing on the precontractual duties of information when marketing investment products (insurance-based investment products (IBIPs), such as unit-linked products. It examines the intricate relationship between the disclosure of nonfinancial information, sustainability considerations, and investment decisions, emphasizing the integration of ESG criteria into governance and, finally, its impact on product quality and the dissemination of sustainability information to investors.