1 June: What’s going on in ESG and insurance?
June 1, 2023
Welcome to our ESG roundup, keeping you up to date on the insurance industry’s most significant ESG-related news. The week’s topic: Exodus from the NZIA
Read our summary and analysis below.
Analysis
Exodus from the NZIA
The last few weeks has seen major changes in the landscape of the insurance ESG world, with thirteen insurers departing the UN’s Net Zero Insurance Alliance (NZIA) including major players such as Lloyd’s and Swiss Re.
Three key areas of battle in the ESG arena are worth noting this week amidst the exodus: first, backlash against ESG in the US from Republican legislators. Second, concerns over antitrust issues and, third, protests by activists against underwriting of fossil fuel projects.
In the US, Republicans are going to war against a “radical environmental agenda” that they see as being unfairly pushed onto customers and increasing their premiums. Meanwhile, more than twenty attorneys have claimed that a requirement for NZIA members to stop providing cover for fossil fuels may violate antitrust laws. Understandably, activists are pushing back with protests outside Lloyd’s this week against underwriting of fossil fuel projects. A key symbol in this fight is opposition to the highly controversial Adani Carmichael coalmine in Queensland, Australia.
It is difficult to see how the alliance survives with so many major players, including founding members, leaving but hope is not lost for ESG progress in the (re)insurance industry. Many departure announcements were followed by other ESG commitments – SCOR announced new sustainability policies, SwissRe stated “Our commitment to our sustainability strategy remains unchanged” which includes a commitment to net-zero by 2050, and Munich Re launched a new “Green Solutions” proposition.
Summary
NZIA
How the sleepy world of insurance found itself on the frontlines of the net zero battle (The Telegraph)
US Republicans are going to war against what they call a “radical environmental agenda” being pushed by the insurance industry, blaming it for pushing up premiums and fuel prices for millions of Americans. At the same time, climate campaigners are piling pressure on the same companies, arguing their green policies are too weak.
Many are choosing to retreat from the issue, with several major insurers quitting the NZIA in recent months – including AXA, Allianz, SCOR, Swiss Re, Munich Re, Zurich Insurance, and Hannover Re.
More than 20 attorneys general claimed that a requirement for NZIA members to stop providing cover for fossil fuels may violate competition laws. The plan was also driving up fuel prices for ordinary Americans, they argued. Activists at the other end of the spectrum do not believe the industry is doing enough – with protests outside Lloyd’s as recently as last week.
Insurers Leave U.N. Climate Alliance Over ESG Pushback And Antitrust Claims (Forbes)
Global insurers are abandoning the UN Net-Zero Insurance Alliance (NZIA) over ESG backlash and antitrust concerns. The UN formed the alliance in 2021 as a way to encourage the insurance industry to take action on climate change. It is focused on obtaining net-zero greenhouse gas emissions by 2050 and forces insurers to change their internal practices to reduce carbon emissions amongst other things.
The element of the NZIA which is concerning to some antitrust experts is the need to use the insurance portfolio to encourage businesses and other clients to implement net-zero actions. Amidst a US pushback against ESG by some Republican legislators, this exodus has occurred from the NZIA.
Tokio Marine cuts ties with NZIA | Insurance Business Australia (Insurance Business Mag)
Tokio Marine, the largest insurer in Japan, declined to give a reason for its exit. As per a spokesperson’s statement to Bloomberg, the insurer said that it will continue to consider measures to materialize a cleaner future such as the use of renewable energy, as well as emphasizing that it will keep a close eye on social and environmental initiatives.
SCOR announces NZIA withdrawal and new sustainability commitments (Reinsurance News)
Global insurer SCOR is withdrawing from the Net-Zero Insurance Alliance (NZIA), CEO Thierry Léger announced during the company’s most recent Annual General Meeting.
This states that the reinsurer will no longer cover new gas field development projects. It also noted that exceptions may be made for insurance and facultative reinsurance for insureds with a verified strategy aligned with a credible Net Zero transition plan based on the Science-Based Targets (SBTi) initiative for the oil and gas exploration and production sector.
Activism
Climate activists stage fake fire outside Lloyd’s of London (Insurance Times)
Climate activities staged a fake fire at Lloyd’s of London ahead of their AGM last week (25th May). Activists say their focus was on those insurers linked to the Adani mine in Australia and those still insuring fossil fuel projects.
