Four major insurance companies leave industry net zero initiative

Europe’s three largest insurers and a large Japanese insurer have left the net-zero insurance alliance as growing US political pressure and legal fears put the climate initiative in jeopardy.

AXA, the group’s former chair, Allianz and Scor, as well as Japan’s Sompo Holdings, said on Thursday they were leaving the NZIA, which is part of Mark Carney’s umbrella group Glasgow Financial Alliance for Net Zero, which was founded by the former Bank of was created. The governor of England ahead of the UN climate summit in Glasgow in 2021.

The departures bring the total number of large insurers who have left the NZIA to at least eight, severely curtailing its collective power and calling into question its future. Its website listed 23 members on Thursday.

Gfanz and its members have come under fire from Republican politicians in the US, who are targeting collective climate action groups they believe are unfairly bashing the oil and gas industry.

Apart from a high-profile departure from US asset manager Vanguard in December, Gfanz’s asset management, banking and asset owner subgroups have mostly weathered the storm. Gfanz did not immediately respond to a request for comment.

However, its insurance arm, NZIA, has struggled to gain members outside Europe and Asia. And, earlier this month, its members were sent a letter from US state attorneys-general raising “serious concerns” over whether the coalition complies with antitrust laws.

Munich Re, one of the world’s largest reinsurers and a founding member of NZIA, left the group at the end of March. Its chief executive said he did not want to expose the group to “anti-material risks”.

Zurich, an insurance group, and Hannover Re, another reinsurer, followed in April. Reinsurer Swiss Re also exited earlier this week.

“As the Net-Zero Insurance Alliance disintegrates before our eyes, we must ask why these giant companies with hordes of lawyers did not see antitrust issues as a major obstacle when establishing the alliance. And we have to wonder whether the withdrawal from the alliance is driven more by fear of losing business in the US rather than an actual legal crisis,” said Patrick McCully, senior analyst at the nonprofit Reclaim Finance.

Two people briefed on the decisions by insurers to leave said they did not think the initiative, which has considered competition issues from the outset, would lose a legal battle, but feared distraction. . “This is a fight that insurers can save themselves from,” said one.

According to a person close to the leadership team at the Glasgow Financial Alliance for Net Zero, European governments have also privately expressed concern that insurers in the NZIA could increase energy costs if they choose to collectively underwrite fossil fuels. Shut it down

“For national security (reasons) they are concerned about keeping the lights on,” the person said.

France’s AXA said on Thursday it would “continue its personal sustainability journey as an insurer, an investor and a responsible company”.

Allianz said it is “fully committed” to the parallel organization of property owners.

The departure of reinsurer Score was announced at Thursday’s annual meeting by its new chief executive, along with a set of new climate pledges.

Japanese insurer Sompo, which joined the coalition last June, said it would continue to “vigorously” pursue its climate goals outside the group.

In recent years insurers have come under increasing pressure from activist investors and campaigners to cut their coverage of the most polluting areas.

The NZIA was an attempt to nudge insurers around the goal of reducing the carbon footprint of their underwriting, but critics highlighted the lack of US members and the fact that a ban on insuring coal was not a condition of joining.

Peter Bosshard, co-ordinator of the Insure Our Future advocacy group, argued that the challenges faced by the NZIA demonstrate the need for greater intervention by governments: “If insurers can no longer act collectively, it is a strong need for regulation.” reason.”

Lloyd’s of London, the city’s specialty insurance market, which was subject to another protest by climate activists at its annual meeting on Thursday, said it would remain an NZIA member. It later said it was reviewing the letter sent by the US state attorney-general and noted that it was for “individual businesses that operate in Lloyd’s to market their business and strategy decisions”.

The United Nations Environment Program Finance Initiative, which calls itself the NZIA, did not immediately respond to a request for comment on the latest departures, but has previously noted that it is “a voluntary initiative”.

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