The comprehensive European Union legislation referred to as the “European Green Deal” or “Sustainable Finance” continued in 2022. The legislative process for the Corporate Sustainability Reporting Directive (CSRD) was pursued to a significant extent alongside the ongoing work carried out by the European Financial Reporting Advisory Group (EFRAG) on the new mandatory European Sustainability Reporting Standards (ESRS) that will take effect from reporting year 2024, the final draft of which was submitted to the European Commission in November 2022. Of particular note is the scope of the mandatory standard ESRS E1, which stipulates disclosures relating to a transition plan, among other requirements. This transition plan is primarily intended as a roadmap for the asset and liability side of the balance sheet and the office environment in achieving the goals of the Paris Climate Agreement. In February 2022, the European Union published its Corporate Sustainability Due Diligence Directive (CSDDD), which provides in particular for due diligence obligations for the protection of people and the environment, both on the customer and the supplier side. It is currently expected that the CSDDD will become applicable during the course of 2025.
In terms of implementation, from August 2022, the sustainability preferences of life insurance customers were to be taken into account and sustainability risks in risk management and investments were to be illustrated. The life insurance companies within the VIG Group have also prepared for the use of product templates for life insurance products from 2023, in line with the Sustainable Finance Disclosure Regulation (SFDR). The Sustainability Report 2021, published in 2022, contained for the first time the taxonomy-eligible investment and underwriting KPIs in accordance with Article 8 of the EU Taxonomy Regulation. Starting in 2023, it will be mandatory to report on the taxonomy-compliant investment and underwriting KPIs.
Regulating the digital security of the financial sector was also a focus of attention at the European level during the reporting period. The Digital Operational Resilience Act (DORA) was published in the Official Journal of the European Union on 27 December 2022. DORA will be applicable to European financial market participants from 17 January 2025 and will oblige them, among other things, to take all necessary security measures to mitigate cyber-attacks and other IT risks.
The international sanctions environment changed dramatically in 2022 in terms of its dynamic, its complexity and its scope. In response to Russia’s aggression against Ukraine, multiple countries and organisations – above all the European Union, the United States of American and the United Kingdom – imposed far-reaching sanctions on Russia or expanded existing sanctions. The restrictions range from (investment) restrictions on certain economic sectors to embargos on goods and complete trade embargoes for certain regions to the considerable expansion of the number of people and companies placed on sanctions lists, with whom business relations are therefore prohibited. Due to human rights abuses by the Iranian regime, the European Union in particular imposed new sanctions on Iran, while the United States of America imposed further sanctions on the country.
As the conflicts continue, additional restrictive measures have already been taken against both Russia and Iran in 2023, and further stricter measures can be expected in the course of the year.
The EU Directive (EU) 2019/1937 on the protection of persons who report breaches of Union law (Whistleblowing Directive) sets out minimum standards for protecting whistleblowers from retaliation and the establishment of confidential reporting channels by companies and public bodies. The Whistleblowing Directive had to be transposed into national law by EU Member States by 17 December 2021. As the majority of Member States had failed to meet this deadline for local transposition, the European Commission initiated infringement proceedings against the States concerned at the beginning of 2022. While a large number of draft bills were published at national level during the reporting period, most Member States still have not yet transposed the Whistleblowing Directive into national law. In February 2023, the Austrian Parliament passed the Whistleblower Protection Act (Hinweisgeber:innenschutzgesetz – HSchG).