A group of major insurers including Lloyds, AXA, Sompo, Allianz and Scor have announced that they have discontinued their membership in the Net-Zero Insurance Alliance (NZIA), marking a major setback for the UN Environment Program (UNEP)-backed collaboration aimed at helping insurance companies accelerate the global transition to net zero greenhouse gas (GHG) emissions through their underwriting and risk management practices.
The announcements come amidst building pressure from Republican politicians in the U.S., who have been warning financial institutions including insurers and asset owners of potential legal violations from their participation in climate-focused alliances.
The NZIA was launched in 2021 by eight insurance and reinsurance companies – including AXA, Allianz and Scor as founding members – and by early 2023 grew to nearly 30 members representing approximately 15% of global premium volume. Signatory commitments included transitioning insurance and reinsurance underwriting portfolios to net-zero GHG emissions by 2050, through areas including underwriting criteria and guidelines, engagement with clients, the development of insurance solutions for low-emission and zero-emission technologies and nature-based solutions, among others.
In a statement following the departures, UNEP said that announcements were made “in light of the recent discussions within the United States,” and that the insurers that exited the NZIA were “particularly those with significant US business and exposure.”
The announcements followed the publication of a letter sent by 23 U.S. state Attorneys General to members of the NZIA, warning that the AGs “are concerned with the legality of your commitments to collaborate with other insurers and asset owners in order to advance an activist climate agenda,” citing specifically potential anti-trust violations from the coordinated actions of the group, as well as state laws, such as those that limit reasons for refusal to provide insurance.
The NZIA is part the Glasgow Financial Alliance for Net Zero (GFANZ), a UN-backed climate-focused multi-trillion dollar coalition of financial institutions that also include the Net Zero Asset Managers initiative (NZAM), the Net Zero Asset Owner Alliance (NZAOA), the Net Zero Banking Alliance (NZBA), the Net Zero Financial Service Providers Alliance (NZFSPA), the Net Zero Investment Consultants Initiative (NZICI), and the Paris Aligned Asset Owners (PAAO).
In a statement provided to ESG Today following the departures, a GFANZ spokesperson said:
“These political attacks are now interfering with insurers’ independent efforts to price climate risk, which will harm policyholders, main street investors and local economies. Despite these political headwinds, we will continue to support insurers’ efforts to manage climate risk and develop transition plans.”
Other insurance companies that have recently exited the alliance include founding members Munich Re and Swiss Re and Zurich insurance Group, as well as Hannover Re.
With limited exceptions, the NZIA has accounted for the significant majority of departures from GFANZ alliances, possibly due to unique status of the insurance industry in the U.S., which is largely regulated on a state by state basis, and potentially limiting the ability of anti-ESG politicians to pressure members of the other alliances to follow suit.
Notably, each of the insurers that left the NZIA have retained their membership in the NZAOA.
ESG Today received statements from each of the five insurers, with AXA, Allianz, Sompo and Lloyd’s each underscoring continued commitments to their respective sustainability and climate strategies. Scor announced its departure at its AGM, while also unveiling a series of new climate-focused commitments, including significant new restrictions on providing insurance coverage for oil and gas, coal and oil sands projects.