The ‘landmark breakthrough’ aims to ‘serve as a catalyst to set unprecedented and ambitious’ net zero targets, says group chair

The United Nations-convened Net Zero Insurance Alliance (NZIA) has launched its first target-setting protocol for the climate at the World Economic Forum’s annual meeting in Davos, Switzerland, today (17 January 2023).

The NZIA was established by the United Nations Environment Programme’s (UNEP) Principles for Sustainable Insurance Initiative at the G20 Climate Summit in Venice, July 2021, with the aim of supporting its members to achieve net zero ambitions.

The group now consists of 29 insurer members – representing around 15% of world premium volume globally.

According to the NZIA, introducing the new protocol will enable NZIA members to independently set science-based, intermediate targets for their respective insurance and resinsurance underwriting portfolios.

Renaud Guidée, NZIA chair and group chief risk officer at Axa, said the implementation is a “landmark breakthrough”.

She added: “For the first time ever, insurance and reinsurance companies among the largest globally have built a framework and measurement tools to assess the impact of their activities on climate change.

”The NZIA’s target-setting protocol will serve as a catalyst to set unprecedented and ambitious targets towards net zero.” 

Deadline dates

The protocol outlines five target types within three target categories – two types within the emissions reduction category, two types within the engagement category and one for the reinsuring the transition category.

Existing members will be required to set at least one of the five target types by 31 July 2023 and at least one target type in each of the three target categories by 31 July 2024.

New members joining after January 2023, on the other hand, will have six months to set their first target and an additional one year to set a target type in each of the three categories.

The launch builds on the NZIA and Partnership for Carbon Accounting Financials (PCAF) developing a standard to measure greenhouse gas emissions associated with insurance underwriting portfolios (September 2021).

Butch Bacani, who leads the UNEP’s Principles for Sustainable Insurance Initiative, said: “Now is the time for insurers to set ambitious and credible science-based decarbonisation targets for their respective insurance portfolios and support a just transition to a net-zero emissions economy to avert climate catastrophe and ensure a sustainable future.”

Lacking ambition 

Protest group Insure Our Future, however, have stated that the launch does not go far enough. 

The group’s global coordinator Peter Bosshard said: ”The NZIA’s protocol is devoid of any ambition and will not align insurance underwriting with a 1.5 degrees centigrade pathway.

“It offers a fig leaf for business as usual and opens the door for corporate greenwashing – insurance companies should go beyond this low ambition protocol and follow the science when they set their decarbonisation targets.” 

Part of the group’s criticism is aimed at the protocol’s stipulations that insurers “should” set targets while not actually mandating them to do so. 

In partnership with Reclaim Finance, Insure Our Future has announced that will assess insurance companies’ targets and “call out” those who it deems ”laggards” via a scoring and ranking exercise.