Stockholm (NordSIP) – In recent years, the insurance industry has taken a series of steps to accelerate the transition to a net-zero global economy. Among notable initiatives was the launch of the United Nations-convened Net-Zero Insurance Alliance (NZIA) at the G20 Venice Conference on Climate in July 2021. Acknowledging the critical role that the industry has in achieving the transition, the Alliance aims to support its members’ efforts to decarbonise their underwriting portfolios by individually setting science-based intermediate targets and reporting on their progress annually. NZIA also advocates for and engages in governmental policies for a science-based and socially just transition of economic sectors to net zero.
At the World Economic Forum’s Annual Meeting in Davos earlier this year, NZIA launched its first Target-Setting Protocol. The document outlines five types of targets within three categories: emissions reduction, engagement, and re/insuring the transition. Existing NZIA members are 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 categories by 31 July 2024. Those joining the Alliance after January 2023 will have six months to set their first target and one year after that to set a target type for each category.
“The launch of the Protocol signals the move from commitment to implementation,” commented Butch Bacani, who leads UNEP’s Principles for Sustainable Insurance Initiative, which created the NZIA last year, at the launch event. “Now is the time for insurers to set ambitious and credible science-based decarbonization 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.”
Fast forward a couple of months and discord seems to have struck the ranks of the Alliance.
On 31 March, Munich Re, the world’s largest reinsurer and one of the founding members of NZIA, announced that it would be discontinuing its membership. The company was careful to note that the decision would not affect its ambitious climate targets. “Our climate commitment is unwavering,” comments Joachim Wenning, CEO of Munich Re. “We follow scientific recommendations. To date, we are decarbonizing even faster than what is required to reach net zero by 2050.”
According to him, the reason for leaving NZIA is the material antitrust risks involved in cooperating with fellow insurers. “In our view, the opportunities to pursue decarbonization 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,” says Wenning.
Only a few days later, one more of the founding members of NZIA, Zurich, a global multi-line insurance company, confirmed to Reinsurance News that it, too, would be withdrawing from the Alliance. “We continue to remain fully committed to our sustainability ambitions and to supporting the net-zero transition,” reads Zurich’s statement, much like that of Munich Re.
Regarding the reasons for leaving the Alliance, Zurich does not mention antitrust concerns. “After establishing a standardized methodology for measuring and disclosing greenhouse gas (GHG) emissions associated to insurance and reinsurance underwriting portfolios, we want to focus our resources to support our customers with their transition,” the company explains.
It would appear that the collective move from net-zero commitment to implementation has stumbled upon some serious hurdles. Let us see whether more NZIA members will follow the lead of Munich Re and Zurich as we draw closer to the end of the deadline for following the Target-Setting Protocol in July.
