Europe’s three largest insurers have withdrawn from the industry’s net zero initiative

Europe’s three biggest insurers have pulled out of the Net-Zero Insurance Alliance as growing political pressure and legal fears in the US plunge the climate initiative into crisis.

Axa, the group’s former chairman, Allianz and Scor said on Thursday it was pulling out of NZIA, which is part of Mark Carney’s Glasgow Financial Alliance for Net Zero, an umbrella group set up by the former Bank of England governor ahead of the UN climate summit. . It was held in Glasgow in 2021.

The departures bring to seven the number of major insurers leaving NZIA, severely curtailing its collective power and calling into question its future. There were 23 members listed on its website on Thursday.

Gfanz and its members have come under fire from Republican politicians in the United States, who are targeting collective climate groups that they say are unfairly hurting the oil and gas industry.

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

However, its insurer, NZIA, has struggled to gain members outside of Europe and Asia. And earlier this month, US attorneys general sent a letter to its members expressing “serious concerns” about the association’s compliance with antitrust laws.

Munich Re, one of the world’s largest reinsurance companies 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 “significant antitrust risks”.

Insurance group Zurich and Hannover Re, another reinsurer, left in April. Reinsurer Swiss Re also left earlier this week.

“As the Net-Zero Insurance Alliance disintegrates before our eyes, we have to ask why these huge companies with their hordes of lawyers didn’t see antitrust issues as a serious obstacle when they formed the alliance. And we have to wonder if their break from the alliance has more to do with fear of losing US business than with any real legal threat,” said Patrick McCully, senior analyst at non-profit Reclaim Finance.

Two people briefed on the insurers’ decisions to pull out said they didn’t think the initiative, which has considered competition issues from the start, would lose the legal battle, but feared it would be a distraction. “This battle can be spared by the insurers,” said one.

According to a person close to the leadership group of the Glasgow Financial Alliance for Net Zero, European governments have privately expressed concern that NZIA insurers could lead to higher energy costs if they collectively cut fossil fuel insurance.

“For national security [reasons] they’re worried about keeping the lights on,” the person said.

France’s Axa said on Thursday that it will “continue its individual sustainability journey as an insurer, investor and responsible company”.

Allianz said it remained “fully committed” to a parallel asset ownership entity.

The departure of reinsurance company Scor was announced by its new CEO at its annual meeting on Thursday, along with a series of new climate protection promises.

Insurers have come under increasing pressure in recent years from activist investors and campaigners to reduce their cover for the most polluting sectors.

The NZIA was one attempt to rally insurers around a target to reduce the carbon footprint of their insurance contracts, but critics have highlighted the lack of US members and the fact that a ban on carbon insurance is not a condition for joining.

The challenges facing the NZIA show that greater intervention by governments is needed, argued Peter Bosshard, coordinator of the advocacy group Secure Our Future: “If insurers can no longer act together, this is a strong case for regulation.”

Lloyd’s of London, the City’s specialist insurance market, which was again protested by climate activists at its annual meeting on Thursday, said it would remain a member of the NZIA, but added that it was “for individual businesses at Lloyd’s. market to make their own business and strategic decisions”.

The UN Environment Financing Initiative, which convenes the NZIA, did not immediately respond to a request for comment on the latest deviations, but previously noted that it was a “voluntary initiative”.