A global climate alliance for insurers needs to make its membership rules less prescriptive or risk falling apart, John Neal, the Chief Executive of Lloyd’s of London told Reuters.
With some major re/insurers having withdrawn from the Net-Zero Insurance Alliance (NZIA), the United Nations Environment Programme (UNEP) has stated that there’s a “fundamental and urgent” need for collaboration with the global insurance industry to successfully tackle the climate emergency. Recent discussions with the United States were stated as the reason for the withdrawal.
Earlier this week, reinsurance giant Swiss Re became the latest to withdraw from the NZIA, which was convened by UNEP Finance Initiative’s Principles for Sustainable Insurance (PSI) at the G20 Climate Summit in Venice in 2021. Munich Re, Zurich Insurance and Hannover Re have already made their exits.
In response, Neal told Reuters the exits should lead to a reevaluation of what it means to be a member of the group, “There are five objectives, and you have 12 months to meet one of them and 36 months to meet three of them. NZIA need to have another look at what their objectives are or the alliance will fall apart.”
Lloyd’s complied with NZIA’s requirements and had no plans to exit so far, “We don’t need to precipitate this,” Neal added.
Republican federal and state officials have been pushing back on growing efforts by investors and executives to include environmental, social and governance (ESG) factors in their business decision-making.
Signatories to NZIA, which are a part of the Glasgow Financial Alliance for Net Zero set up by U.N. climate envoy Mark Carney, will hold a call on today to discuss the situation in the United States and NZIA’s options including whether “to carry on or wind it up,” a source familiar with the matter said to Reuters.
The call is to be followed by a meeting of the group’s steering committee, which is chaired by Renaud Guidée, AXA’s Group Chief Risk Officer, the source said, speaking on condition of anonymity because of the sensitivity of the matter.
In May, 23 U.S. state Attorneys General told NZIA members that the group’s targets and requirements appear to violate both federal and state antitrust laws giving insurers a month to respond in a May 15 letter seen by Reuters. Followed by accusations against the insurers of engaging in collaborative action “to advance an activist climate agenda” which was having “serious detrimental effects” on the residents of their states.
The lawmakers said, “The push to force insurance companies and their clients to rapidly reduce their emissions has led not only to increased insurance costs, but also to high gas prices and higher costs for products and services across the board, resulting in record-breaking inflation and financial hardships for the residents of our states.”
UNEP said on Wednesday that members, particularly those with sizeable U.S. businesses or exposure, had “made the individual and unilateral decision to either remain or withdraw” from NZIA and added, “Regardless of the situation, UNEP reaffirms its conviction ever since it initiated, convened, and launched the NZIA that in order to successfully tackle the climate emergency, there is a fundamental and urgent need for collaboration, not just individual action.”