Future of Net-Zero Insurance Alliance in doubt
A bold initiative demonstrating leadership in the global re/insurance industry as it related to tackling climate change, has slowly been coming undone.
One by one, some of the world’s most dynamic risk-bearing institutions have been resigning from the Net-Zero Insurance Alliance, because of the threat of political and legal risks.
The United Nations convened programme, begun at the G20 Climate Summit in Venice in 2021, featured members committed to transition their insurance and reinsurance underwriting portfolios to net-zero greenhouse gas emissions by 2050, in order to contribute to the implementation of the Paris Agreement on Climate Change.
Even the NZIA chair, Axa, the French parent company to Bermudian-based Axa XL, has withdrawn from the organisation of which it was a founding member.
They are not alone. Lloyd’s of London has also followed suit. At least 13 major carriers have withdrawn from NZIA in the last two months.
The withdrawals come amid political opposition in the United States, where the spectre of antitrust violations has been raised.
Reuters reported: “The group (NZIA) has been buffeted by growing political opposition from some Republicans in the United States, who say the group could be violating antitrust laws by working together to reduce clients' carbon emissions.
“This month (May) 23 US state attorneys general told NZIA members that the group's targets and requirements appeared to violate both federal and state antitrust laws.”
Business Insurance magazine said the letter claimed concern with the legality of their “commitments to collaborate with other insurers and asset owners in order to advance an activist climate agenda. These actions have led to serious detrimental effects on the residents of our states.”
The letter continued: “The push to force insurance companies and their clients to rapidly reduce their emissions has led not only to increased insurance costs, but also to high gas prices and higher costs for products and services across the board, resulting in record-breaking inflation and financial hardships for the residents of our states.”
In its withdrawal statement, Axa made it clear that at least under its NZIA leadership, openly available tools and methodologies had now been established for individual companies to measure and disclose greenhouse gas emissions associated with insurance and reinsurance underwriting portfolios.
The company said: “Axa will continue its individual sustainability journey, as an insurer, an investor and a responsible company, leveraging this tool set to set its own individual decarbonisation targets and support its customers in their transition.”
Lloyd’s too, pledged to continue to support the UN’s Principles for Sustainable Insurance and Sustainable Development Goals, and remain committed to delivering a sustainability strategy, including supporting the global economy’s transition.
Most companies have been loath to comment about the reasons for their withdrawal – but Joachim Wenning, chief executive officer of Munich Re, was upfront.
He said: “In our view, the opportunities to pursue decarbonisation goals in a collective approach among insurers worldwide without exposing ourselves to material antitrust risks are so limited that it is more effective to pursue our climate ambition to reduce global warming, individually."