Net-Zero Insurance Alliance target-setting requirement dropped
Alliance has been reduced to ’another industry talk-shop and an empty shell’, activists say
The NZIA target-setting protocol will now serve as a voluntary best practice guide
The Net-Zero Insurance Alliance (NZIA) will no longer require its members to set and publish targets for reducing their insured emissions, the UN Environment Programme (UNEP) has announced.
The announcement followed a series of departures from the NZIA, including by some of its founding members: Munich Re, Swiss Re and Zurich Insurance Group. These exits followed opposition to the NZIA and other environmental, social and governance initiatives by US lawmakers.
Since its launch two years ago, the NZIA and its partners have developed the foundational concepts and frameworks to support its members as they work towards decarbonising their insurance and reinsurance underwriting portfolios. These include a statement of commitment, a white paper on net-zero insurance, the Partnership for Carbon Accounting Financials’ Insurance-Associated Emissions Standard and the NZIA target-setting protocol.
The UNEP said each company that chooses to be a member of the NZIA “unilaterally and independently” decides on the steps it takes towards net zero.
“NZIA membership does not involve any co-ordinated competitive conduct or exchanges of competitively sensitive information. Rather, the NZIA provides a range of methodology options to support individual NZIA members’ progress towards their own net-zero commitments,” the UNEP said.
“NZIA member companies have no obligation to set or publish targets: rather, individual member companies will be responsible and publicly accountable for any targets they set, the methodologies used to set them, the timeline on which they decide to publish any targets and the progress they are making. As before, NZIA members that publish their own decarbonisation targets and timelines do so unilaterally and independently.”
The NZIA target-setting protocol will serve as a “voluntary best practice guide” to aid in the accurate measurement, standardisation and comparability of science-based decarbonisation targets for insurance and reinsurance underwriting portfolios and to enhance overall transparency and accountability across the insurance industry on climate action.
“Insurance market participants – whether NZIA members or not – may, and are encouraged by UNEP, to use the NZIA target-setting protocol and the methodologies it outlines, which aid the measurement, standardisation and comparability of science-based decarbonisation targets for their respective insurance and reinsurance underwriting portfolios in line with a net-zero transition pathway,” the UNEP said.
The UNEP is “fully committed” to strengthening and deepening its collaborative work with the insurance industry and key stakeholders to advance net-zero insurance thinking and practices globally to speed and scale up the transition to a net-zero economy, it added.
NZIA members remain committed to the net-zero transition and are engaging with a broader community of stakeholders on the future evolution of the NZIA.
In response to the UNEP’s statement, the Insure Our Future (IOF) campaign said dropping the obligation to set emission reduction targets will turn the NZIA into “another industry talk-shop and an empty shell”.
IOF stressed the NZIA’s target setting protocol does not violate any antitrust laws and the “attacks” of the US fossil fuel lobby on the NZIA “have no legal merit”.
“It is unfortunate the UNEP caves to the fossil fuel lobby and abolishes the last material requirement NZIA members have to fulfil,” IOF co-ordinator, Peter Bosshard, said. “This reduces the alliance to an empty shell and opens the door for further net-zero greenwashing by the insurance industry.”
IOF said regulators need to create a level playing field within the insurance industry by requiring all insurance companies to adopt science-based transition plans. It said the International Association of Insurance Supervisors should integrate this requirement into its insurance core principles and put the topic on the agenda when it convenes for its annual meeting in Tokyo in November.
The NZIA is part of the Glasgow Financial Alliance for Net Zero, which requires its members to commit to cutting their greenhouse gas emissions. But the alliance has been dogged by antitrust concerns, leading to some members to prefer working independently.
Last month, UN secretary-general, António Guterres, urged the financial community, including re/insurers, to ignore misinformation from supporters of the fossil fuel industry and remain committed to their net-zero alliances.
