Insurers look to ease UN climate alliance rules after member exodus -
sources
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[July 05, 2023]
By Tommy Wilkes
LONDON (Reuters) -The remaining insurers in a United Nations-backed
coalition aimed at tackling climate change are poised to loosen the
alliance's membership requirements, after a recent exodus of members,
according to two people familiar with the discussions. The U.N.-convened
Net-Zero Insurance Alliance (NZIA) is set to remove a six-month deadline
for members to publish greenhouse gas emissions targets alongside other
changes to make membership less prescriptive, the sources said.
The hope is to "steady the ship" and create space for ex-members to
consider returning later, they said. The NZIA has lost more than half
its members including AXA, Lloyd's of London and Tokio Marine since
attorneys general from 23 Republican-run U.S. states sent a May 15
letter seeking information about insurers' membership and threatening
legal action.
The attorneys general said the NZIA's requirements for members to
publish and meet greenhouse gas emission-reduction targets appeared to
violate antitrust laws, and that the alliance's actions had pushed up
insurance and other costs for consumers. Launched in 2021 to drive
insurers' efforts to hit zero emissions on a net basis by 2050 in their
underwriting portfolios, the NZIA is one of several industry coalitions
under the Glasgow Financial Alliance for Net Zero (GFANZ) umbrella
group.
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The NZIA now has 12 members, down from a peak of 30. Other GFANZ
alliances have also faced U.S. political pressure but have not seen many
members leave.
CONCERN FROM CAMPAIGNERS The NZIA's 'target-setting protocol' published
in January required insurers to publish their initial 2030 targets for
reducing emissions by end-July, or within six months of joining for
newer entrants, and then report their progress against the targets
annually. But remaining members, among them Britain's Aviva, Italy's
Generali and South Korea's Shinhan Life, want to avoid insurers
publishing targets simultaneously, which could invite fresh accusations
of anti-competitive collaboration, the first source said, speaking on
condition of anonymity because of the sensitivity of the matter.
An NZIA spokesperson declined to comment.
The potential for looser rules was met with concern by environmental
campaigners, who say insurers are already doing too little to curb
emissions and that aggressive collective action is needed.
"The NZIA has had very minimal requirements and expectations of
membership from the start," said Peter Bosshard, coordinator of the
Insure our Future campaign.
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The alliance, Bosshard said, developed less stringent requirements -
such as not restricting fossil fuel underwriting - than another
investor coalition, the Net Zero Asset Owners Alliance, precisely to
avoid accusations it was breaching anti-trust laws.
"The target-setting is the only thing left," he added. Without such
requirements "the NZIA would just become another industry talking
shop".
Other proposals being discussed include making the alliance a
broader forum where insurance industry bodies participate in areas
like target-setting best practice, the first source said.
The changes under discussion have not been finalised, the sources
said, and it's not clear how the alliance would deal with insurers
that drag their feet in publishing targets.
U.S. EXPOSURE
Insurers inside and outside the NZIA say they remain committed to
their net-zero pledges despite the backlash in the United States.
They are convinced they are not violating antitrust rules, but
companies departing the coalition were concerned about their
exposure to regulatory and litigation risks, given U.S. states are
the industry's primary regulator. Insurers with little U.S. exposure
have also been quitting, threatening the alliance's viability.
Insurance Australia Group declined to explain its exit last month.
Canada's Beneva said the U.S. political debate around environmental,
social and governance (ESG) criteria was "a distraction from the
actions around which the company wishes to rally".
Remaining members believe the NZIA still has a valuable role, and
point to methodologies it developed for assessing and reporting on
underwriting-linked emissions. France's AXA, which chaired the NZIA
before quitting in May, last week published its first emissions
goals for its insurance portfolio.
(Reporting by Tommy Reggiori Wilkes; Editing by Greg Roumeliotis,
Simon Jessop, Emelia Sithole-Matarise and David Evans)
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