Insurers’ withdrawal from the Net-Zero Insurance Alliance does not impede their ability to ’implement fossil fuel exclusion policies aligned with the urgent need for climate action,’ says activist group’s European coordinator
Following reports of the high-profile exits from the Net-Zero Insurance Alliance (NZIA) in May this year (2023), climate activist group Insure Our Future has warned that the breakup of the group should not represent the slowing down of momentum in the fight against climate change from the insurance sector.
Amidst the setback, Lindsay Keenan, the European coordinator of Insure Our Future, urged insurers to align themselves with the “right side of history” and to “take action that they will be proud to face their children with”.
He explained to Insurance Times that while the withdrawal of insurers from the organisation was indeed a blow, it should not undermine the broader goals and ambitions of the collective effort to achieve global net-zero emissions by 2050.
The NZIA, a climate alliance for insurers convened by the United Nations, was established in July 2021 by leading companies such as Axa (NZIA chair), Allianz, Aviva, Generali, Munich Re, Scor, Swiss Re, and Zurich Insurance Group.
As part of the Glasgow Financial Alliance for Net Zero (GFANZ) initiated by UN special envoy Mark Carney in April 2021, its primary objective was to support (re)insurers in transitioning their underwriting portfolios to achieve net-zero greenhouse gas (GHG) emissions by 2050.
Falling apart
In recent months however, a series of departures from the NZIA occurred following concerns raised by Republican attorney generals in the United States around the potentially illegal character of corporate collusion on climate objectives that could breach antitrust regulations.
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In a letter addressed to NZIA members earlier this year (15 May 2023), these politicians alleged that the alliance was promoting an activist climate agenda, which they believed resulted in increased costs and financial hardships not only within the insurance sector but across various industries.
It also highlighted that under the nation’s antitrust laws, certain arrangements among business competitors were “strictly forbidden because they are unfair or unreasonably harmful to competition”.
Consequently, the alliance has lost over a dozen members, with Lloyd’s of London being the latest firm to announce its withdrawal through a statement released on May 26, 2023.
Other departing members include Munich Re, Zurich, Hannover Re, Swiss Re, Tokio Marine Holdings, Axa, Allianz, Scor, Sompo Holdings, QBE, Grupo Catalana Occidente and MS&AD Insurance Group Holdings Inc., with five of the original eight founders among them
Keenan clarified that insurers’ withdrawal from the Net-Zero Insurance Alliance does not impede their ability to “implement fossil fuel exclusion policies aligned with the urgent need for climate action”.
He also emphasised that each insurer retains the autonomy to pursue measures that contribute to global efforts in addressing climate change outside of the bounds of NZIA membership.
Reclaim Finance senior analyst Patrick McCully has also urged insurers to “not reverse their exisiting climate pledges”.
Lessons Learnt
Reflecting on the withdrawals of insurers from the NZIA, Keenan highlighted two significant lessons for the insurance industry.
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Firstly, he emphasised the importance of disregarding the vocal opposition and dissent of “climate science deniers”
Secondly, Keenan pointed out that fossil fuel companies would continue to prioritise short-term profits and support lobbyists opposed to the environmental work embraced by the NZIA, instead of embracing sustainable transitions.
He explained: “Insurers and their trade associations can meet and exchange ideas on sustainability all of the time and they will continue to do so in whatever forums.
“The important thing now is that time has run out and what is needed is action by all to stop developing more fossil fuels and to rapidly phase down and out the use of fossil fuels.
“[Activists] regularly communicate with the insurance sector openly and transparently about the action they need to take and we will continue to strongly advocate that they act urgently to align their policies with the urgent need for climate action.
“The global scientific community consensus on climate change is clear – we will do what we can to continue to push them to act and to expose their inaction if necessary.”
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