Three of Europe’s largest insurers have abandoned the industry’s zero net initiative

Featured Sponsor

Store	Link	Sample Product
UK Artful Impressions	Premiere Etsy Store

Three of Europe’s largest insurers have left the Net-Zero Insurance Alliance as mounting US political pressure and legal fears plunge the climate initiative into crisis.

Axa, the former chairman of Group, Allianz and Scor said on Thursday they were leaving the NZIA, which is a part of Mark Carney’s umbrella group, Glasgow Financial Alliance for Net Zerocreated by the former governor of the Bank of England in view of the UN climate summit held in Glasgow in 2021.

The departures bring to seven the total number of large insurers who have left the NZIA, severely curbing its collective power and raising questions about its future. Its website listed 23 members on Thursday.

Gfanz and his members have come under attack from Republican politicians in the United States, who target collective climate action groups they perceive as wrongfully affecting the oil and gas industry.

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

However, its insurance arm, the NZIA, has struggled to gain members outside Europe and Asia. And, earlier this month, its members were sent a letter from US attorneys general raising “serious concerns” about whether the alliance was abiding by antitrust laws.

Munich Re, one of the world’s largest reinsurers and a founding member of the NZIA, left the group in late March. His chief executive said he did not want to expose the group to “substantial antitrust risk”.

Zurich, an insurance group, and Hannover Re, another reinsurer, exited in April. Reinsurer Swiss Re also folded 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 major obstacle when they founded the alliance. And we have to ask whether their departure from the alliance has more to do with fears of losing U.S. business than real legal risk,” said Patrick McCully, a senior analyst at the nonprofit Reclaim Finance.

Two people briefed on the insurers’ decisions to step down said they didn’t think the initiative, which considered competition concerns from the outset, would lose a legal battle, but they feared the distraction it would cause. “This is a battle insurers can spare themselves,” one said.

European governments have also privately expressed concern that NZIA insurers could drive up the cost of energy if they collectively stop subscribing to fossil fuels, according to a person close to the leadership team at the Glasgow Financial Alliance for Net Zero.

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

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

Allianz said it remained “fully committed” to a parallel organization for asset owners.

The departure of reinsurer Scor was announced by its new chief executive at its annual meeting on Thursday, alongside a host of new climate pledges.

In recent years, insurers have come under increasing pressure from activist and activist investors to reduce their coverage of the most polluting sectors.

The NZIA was an attempt to get insurers to aim to reduce the carbon footprint of their underwriting, but it is critical highlighted the lack of US members and the fact that the ban on insuring coal was not a condition of membership.

The challenges faced by the NZIA demonstrate the need for more government intervention, said Peter Bosshard, coordinator of advocacy group Securing Our Future: ‘If insurers can no longer act collectively, that is a strong case for regulation. “.

Lloyd’s of London, the City’s specialist insurance market, which was the subject of another protest by climate campaigners at its annual meeting on Thursday, said it remained a member of the NZIA. He later added that he was reviewing the letter sent by the US attorneys general and noted that it is for “individual firms operating in the Lloyd’s market to make their own business and strategic decisions.”

The United Nations Environment Program Finance Initiative, which convenes the NZIA, did not immediately respond to a request for comment on the latest departures, but has previously noted that it is “a voluntary initiative”.

Climate capital

Where climate change meets business, markets and politics. Explore the coverage of the FT here.

Are you curious about the FT’s environmental sustainability commitments? Learn more about our science goals here