General information

The EU Taxonomy Regulation is a classification system that helps investors, companies and financial institutions define a standardised understanding of which economic activities can be considered environmentally sustainable. Its purpose is to facilitate sustainable investment, protect private investors from greenwashing and help companies become more focused on sustainability. To this end, it applies a list of environmentally sustainable activities and defines criteria for categorising the activity as sustainable under the EU Taxonomy Regulation.

The EU Taxonomy Regulation obliges large companies to report on the taxonomy eligibility and taxonomy alignment of the environmentally sustainable economic activities in their business, investments or lending activities. Depending on the type of undertaking, the EU Taxonomy Regulation requires that companies disclose quantitative and qualitative information on their taxonomy eligible and taxonomy aligned economic activities.

The EU Taxonomy Regulation will become applicable in stages and is still being developed. It includes a transition period for financial institutions for the 2021 financial year which limits disclosure to the taxonomy eligibility of economic activities for two climate-related environmental targets: climate change adaptation and mitigation (as laid down in the Climate Delegated Act (Regulation (EU) 2021/2139)). Eligibility disclosure over the other four environmental targets, plus alignment information, is not yet required.

The relevant economic activities of a.s.r. in light of the EU Taxonomy Regulation are its insurance underwriting activities and investments. a.s.r. has assessed whether these economic activities are taxonomy eligible in relation to the applicable environmental targets: climate change adaptation and mitigation. In the following chapters, the EU Taxonomy Regulation disclosures of a.s.r. for the 2021 financial year are explained together with the definitions, approach and assumptions underlying the eligibility information.

• ¹ Taxonomy eligibility is determined at the coverage level. When Taxonomy eligibility is determined at lines of business level, the eligibility would have been 40% instead of 25%. For more information see header Key estimates and assumptions in this chapter.

EU Taxonomy Regulation disclosures

With regard to the EU Taxonomy Regulation, a.s.r. reports on eligibility for its underwriting activities and investments.

Insurance underwriting activities

The non-life GWP include premiums from P&C, Disability and Health.

P&C

For P&C, the relevant lines of business for a.s.r. described in the Climate Delegated Act are income protection insurance, motor vehicle insurance, other motor insurance, marine, aviation and transport insurance, fire and other damage to property insurance, and assistance. The taxonomy eligible economic activities are the insurance policies within these lines of businesses that also cover climate-related hazards such as heat waves and wildfires, wind-related hazards such as storm, water-related hazards such as flood and heavy precipitation, and solid mass-related hazards such as landslides.

Disability

For Disability the relevant line of business included in the Climate Delegated Act is income protection. To establish eligibility of the underwriting activities of Disability, a.s.r. uses information such as insurance terms and conditions of customer policies. Part of the underwriting premium of Disability is related to the coverage of heat stress, a temperature-related climate peril. Claims paid are based on syndromes or illnesses incurred and reported by policyholders. The cause of a syndrome or illness is not registered due to privacy legislation. Based on the current understanding of the syndromes, a.s.r. estimates the percentage of total claims related to heat stress as immaterial. a.s.r. therefore considers the full premium for income protection insurance taxonomy non-eligible.

Health

All Health premiums were considered taxonomy non-eligible due to the highly regulated health insurance market in the Netherlands, which entails that these are applied to cover health-related costs and are therefore not in the scope of the EU Taxonomy Regulation.

• ¹ Total investments covered includes all direct and indirect investments as defined in the EU Taxonomy Regulation with the exception of investments with exposure to central governments, central banks and supranational issuers.
• ² Undertakings not subject to an obligation to publish non-financial information pursuant to the EU Taxonomy Regulation.
• ³ This concerns mainly investments and savings mortgages.
• ⁴ Taxonomy eligibility is based on the investments covered by the EU Taxonomy Regulation. When taxonomy eligibility is determined based on total investments (including the exposure to central governments, central banks and supranational issuers), the eligibility would have been 27% instead of 35%.

Investments activities

Total investments on behalf of policyholders and investments related to investment contracts that are included within total investments are € 13,526 million.

Investments

The main activities covered by the taxonomy eligible investments are related to:

• Acquisition and ownership of buildings.

• Manufacture of renewable energy technologies, equipment for the production and use of hydrogen, or other low carbon technologies. Installation, maintenance and repair of energy efficiency equipment, charging stations for electric vehicles in buildings and parking spaces attached to buildings, instruments and devices for measuring, regulation and controlling energy performance of buildings, or of renewable energy technologies.

• Electricity generation using solar photovoltaic technology, concentrated solar power (CSP) technology, wind power, ocean energy technologies, hydropower, geothermal energy, renewable non-fossil gaseous and liquid fuels or bio-energy. Cogeneration of heat / cool and power from solar energy, geothermal energy, renewable non-fossil gaseous and liquid fuels or bioenergy.

• Manufacture of low carbon technologies for transport.

• Non-life insurance and reinsurance: underwriting of climate-related perils.

• Transmission and distribution of electricity.

• Infrastructure for rail transport.

• Reinsurance.

• Manufacture of energy efficiency equipment for buildings.

Real estate and real estate equity funds

The main activities covered by the taxonomy eligible investments are related to the acquisition and ownership of buildings, construction of new buildings, renovation of existing buildings, electricity generation from wind power, and to a certain degree forest management.

The farmland portfolio (€ 1,841 million) is considered taxonomy non-eligible as the activity related to agriculture is currently not included in the Climate Delegated Act.

Mortgages and mortgage funds

The main activities covered by the taxonomy eligible investments are related to the funding of acquisition and ownership of buildings, construction of new buildings and renovation of existing buildings.

Description of compliance with the EU Taxonomy Regulation with regard to the business strategy, product design processes and engagement with clients and counterparties

a.s.r. complies with the current scope of the EU Taxonomy Regulation for the 2021 financial year.

Increasing climate-related perils are taken into account when establishing the mid- and long-term strategy of a.s.r., the product design processes, the acceptance policy for customers, claims handling and means of communication. Continuous improvements will be made based on the strategy of a.s.r., taking into consideration the applicable legislation.

Definitions explained

For the purpose of the EU Taxonomy Regulation, the following definitions are applied.

Eligibility versus alignment

A taxonomy eligible economic activity means that the economic activity is described in the Climate Delegated Act, the economic activity does not have to be sustainable. Being taxonomy eligible implies that the economic activity is in scope for further assessment in respect of the particular environmental target, to determine whether it meets the criteria for taxonomy alignment and if so, to what degree.

Alignment of an activity goes beyond eligibility. Taxonomy alignment implies that an economic activity complies with the requirements enumerated specifically for this economic activity in the EU Taxonomy Regulation. An economic activity is considered aligned with the EU Taxonomy Regulation if the activity (in accordance with article 3 of the EU Taxonomy Regulation):

1. Makes a substantial contribution to one or more of the environmental targets set out in the EU Taxonomy Regulation.

2. Does not significantly harm any of the environmental targets set out in EU Taxonomy Regulation.

3. Is carried out in compliance with minimum safeguards such as the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.

4. Complies with technical screening criteria that have been established by the European Commission in the Climate Delegated Act.

At the same time, if an economic activity is not considered taxonomy aligned, this does not mean that the activity is not sustainable. It means that the economic activity does not substantially contribute to one of the six environmental targets currently identified by the EU Taxonomy Regulation. It may still have other positive impacts on sustainability.

a.s.r. also pursues other sustainable targets with its economic activities which are not or not yet included in the EU Taxonomy Regulation. For example, social targets are currently not considered. It is expected that over time, more activities will be included with the further development of the EU Taxonomy Regulation.

Eligibility of insurance underwriting activities

The eligibility disclosure for underwriting activities requires disclosure on the proportion of taxonomy eligible and taxonomy non-eligible non-life insurance economic activities. Eligible non-life GWP relates to insurance activities that are described in the Climate Delegated Act.

The EU Taxonomy Regulation specifically excludes life insurance business from the eligibility of insurance underwriting activities. The investments of life insurance contracts are included in the eligibility assessment of investments.

Non-life GWP are based on the total non-life GWP as reported under SII legislation. Part of the disability portfolio is considered life insurance under SII legislation and is therefore not in scope of the total non-life GWP for this disclosure.

For the 2021 financial year, eligibility for non-life insurance underwriting activities is based on the following requirements:

1. The GWP are reported in one of the following non-life lines of business as defined under SII legislation:

   • medical expense insurance

   • income protection insurance

   • workers’ compensation insurance

   • motor vehicle liability insurance

   • other motor insurance

   • marine, aviation, and transport insurance

   • fire and other damage to property insurance

   • assistance

2. The related underwriting activities cover at least one of the climate-related perils as described in the delegated act.

Lines of business which by definition are not taxonomy eligible are general liability insurance, miscellaneous financial loss, legal expenses insurance, and credit and suretyship insurance.

Eligibility of investments

For the 2021 financial year, investments directed at funding or are associated with economic activities as described in the Climate Delegated Act are considered taxonomy eligible.

a.s.r. is required to report on:

• The proportion in its total assets of exposures to taxonomy non-eligible and taxonomy eligible economic activities.

• The proportion in its total assets of exposures in derivatives.

• The proportion in its total assets of exposures to central governments, central banks and supranational issuers.

• The proportion in its total assets of exposures to undertakings that are not obliged to publish non-financial information pursuant to the EU Taxonomy Regulation.

Exposures in derivatives, central governments, central banks, supranational issues and undertakings that are not obliged to publish non-financial information are excluded from the eligibility assessment.

Total assets are not defined in the EU Taxonomy Regulation. a.s.r. interprets total assets as total investments given that the assets that are in scope for alignment purposes only cover investments.

Total investments include all direct and indirect investments of a.s.r., including own book investments, investments on behalf of policyholders, investments related to investment contracts, loans and mortgages, investment property, property for own use, plant (wind parks) and equipment, as well as, where relevant, intangibles. Investments managed on behalf of third party clients are not included.

Investments covered by the EU Taxonomy Regulation are total investments excluding exposure to central governments, central banks and supranational issuers.

Investments are accounted for using the same accounting principles as applied to the IFRS consolidated financial statements.

• ¹ Investments includes investments own book, investments on behalf of policyholders and investments related to investment contracts. Assets not qualifying as investments are mainly cash and cash equivalents on behalf of policyholders and investment contracts.
• ² (Investment) property includes investment property, property for own use, and plant.
• ³ Assets not qualifying as investments are goodwill, VOBA, deferred tax assets, reinsurance contracts, other assets and cash and cash equivalents. Assets qualifying as investments are other intangible assets, equipment, associates and joint ventures.

Key estimates and assumptions

a.s.r. has made efforts to gather the required data for taxonomy eligibility. In view of uncertainties in the legislation and limitations in the availability of data at the time of preparing the Annual Report, the disclosures made only represent a snapshot at the time of the drafting of the available information. a.s.r. has used interpretations, estimates and assumptions to some extent in order to arrive at the required disclosures. The disclosures made therefore constitute only an indication of the eligibility of the economic activities of a.s.r. The legislation is also still in development. Further delegated legislation will be developed and will take effect in the coming years. The rules will further take shape. Partly for this reason, the publicly available data is expected to improve. Given the above developments, the disclosures made, including the interpretations, estimates and assumptions, will change over time.

The reported figures do not yet show the extent to which the economic activities of a.s.r. are taxonomy-aligned, as described in Article 3 of EU Taxonomy Regulation. Because additional requirements must be met for taxonomy alignment, the expectation is that the taxonomy alignment will differ substantially from the taxonomy eligibility of the economic activities of a.s.r.

The main estimates, assumptions and judgments in applying the EU Taxonomy Regulation are:

Underwriting activities

a.s.r. offers its underwriting activities both directly and through advisors or mandated agents. Own source information was used to determine eligibility for the insurance premium of P&C for insurance policies sold through the direct distribution channels, such as insurance terms and conditions of customer policies. For policies sold by advisors with delegated authority and mandated brokers, no detailed information was available and therefore the same portfolio composition was assumed as for the intermediary channel.

a.s.r. has chosen to report the eligibility of the GWP on coverage level. If a climate related peril is included within the coverage of a non-life insurance product, the GWP of that coverage is considered taxonomy eligible. Currently, the EU Taxonomy Regulation is unclear whether the eligibility of the GWP needs to be reported on the total line of business level or on a more granular level such as coverage level. a.s.r. considers that reporting on coverage level would give investors a better understanding of the taxonomy eligibility of a.s.r.’s insurance activities.

Investments

The eligibility of the investments is based on the Taxonomy Compass of the European Commission and has been determined using Bloomberg data on the Statistical Classification of Economic Activities in the European Community, commonly referred to as NACE codes. This is the industry standard classification system used in the EU. Bloomberg runs the most granular company activities through Bloomberg Industry Classifications. The main activity is then mapped back to the NACE code. a.s.r. considers an investment taxonomy eligible if the NACE code of the investment matches one of the NACE codes of the economic activities in the Climate Delegated Act.

Given the recent publication of the Climate Delegated Act, there is a lack of available data in the market, resulting in incomplete data on certain investments. Such as:

• Four economic activities in the Climate Delegated Act do not have a NACE code; restoration of wetlands, storage of electricity, storage of thermal energy and storage of hydrogen. Investments in these economic activities can not be identified. a.s.r. believes that the taxonomy non-eligible category may therefore be overstated by a limited amount.

• The NACE code per investment is based on the main activity of the underlying entity. Consequently, an investment is either completely taxonomy eligible or taxonomy non-eligible. a.s.r. expects that the impact will be limited as both overstatement or understatement of eligibility is possible.

• For investments funds, a.s.r. depends on the information availability from the external fund managers. For the underlying activities of investment funds for which no information was available, a.s.r. made an assessment of the investments classified as investments in undertakings that are not in scope of NFRD. The remaining investments were classified as taxonomy non-eligible. The impact is expected to be limited.

Estimates are used to report an approximation of the taxonomy eligibility of the investments in financial and non-financial undertaking as, at this moment in time, the required information from these investee companies is not yet available. The estimates are, amongst others, based on information provided by data vendors. For this reason, mainly the taxonomy-disclosures regarding investments and savings mortgages are on a voluntary basis.

(Investment) property and real estate equity funds

For real estate equity funds, eligibility is determined using the economic activities of the underlying assets in that fund. Own source information was used to establish eligibility of the real estate portfolio, such as knowledge of the underlying assets and operation. For external real estate equity funds, the information was provided by the fund manager.

Mortgages and mortgage equity funds

For the most part, own source information was used to establish the eligibility of the mortgages, such as mortgage agreements. For external mortgage funds, the information was provided by the fund manager.

Future developments

Taxonomy

For the 2021 financial year, only the first two environmental targets are in scope for the eligibility assessment. The remaining four environmental targets are expected to be included in the eligibility disclosures from the 2022 financial year onwards. Alignment will also be determined for Annual Reports starting at or after 1 January 2023.

The application of the EU Taxonomy Regulation and its delegated acts will be regularly reviewed and updated by the European authorities, with the possibility to revise and / or complement the list of environmentally sustainable activities, their criteria, as well as the further development of the Taxonomy classification system, including a potential scope expansion.

Corporate Sustainability Reporting Directive

The Corporate Sustainability Reporting Directive (CSRD) is expected to replace the NFRD and to apply to reports published in 2024 (covering the 2023 financial year). It is as yet too early to determine the impact for a.s.r.