A global insurance coalition intended to help curb the sector’s greenhouse gas emissions has relaunched with a new name and weaker membership requirements in response to companies fleeing over allegations of collusion by Republican politicians in the United States.
The insurance group, called the Net Zero Insurance Alliance (NZIA), will be disbanded and replaced by the Forum for Insurance Transition to Net Zero (FIT), the United Nations Environment Programme, which convened the NZIA, said on Thursday.
The move is the latest example of Republican-led attacks on environmental, social, and corporate governance (ESG) initiatives, diluting efforts to tackle climate change.
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Among several climate coalitions of financial firms, the NZIA has been the most vulnerable. This is because rather than being federally regulated in the United States, insurers are overseen at the state level, where Republican officials, hostile to the transition away from fossil fuels, have more sway.
The Forum for Insurance Transition to Net Zero “is a new initiative altogether,” said Butch Bacani, the head of the insurance team at UNEP. “It’s not simply a Version 2.0. It’s really a clean cut and a new structure.”
Members will not need to set targets to reduce their emissions and report on them annually, as was the case with NZIA. Instead, they will be expected to adopt four ‘Principles for Sustainable Insurance’, which focus on processes.
These relate to creating frameworks to measure emissions and setting targets for the members that want to do so; developing energy transition plans; engaging with companies in different sectors; and tackling barriers to developing climate solutions.
The reboot comes after NZIA lost more than half its members, including AXA, Lloyd’s of London and Tokio Marine, after attorneys general from 23 Republican-run U.S. states sent a letter in May 2023 seeking information about insurers’ membership and threatening legal action.
In response, the NZIA eased its membership rules last year, including removing a six-month deadline for members to publish greenhouse gas emissions targets. But some insurers still found membership prescriptive and fretted over some U.S. state regulators cracking down on them.
The FIT is launching with 46 organizations including British insurer Aviva, Italy’s Generali, Singapore Life and Canadian company Co-operators.
It will also have two separate, independent consultative groups to inform its work – one for regulators and supervisors and the other for academic institutions and civil society organizations.
The new structure will also be backed up by a legal team including experts on antitrust law from Freshfields Bruckhaus Deringer, Cleary Gottlieb Steen & Hamilton, and Norton Rose Fulbright.
“We’re now moving into the direction of soft regulation and hard regulation, hence the diversity of stakeholders involved, that we believe are important in terms of embedding net-zero into day-to-day insurance decision-making and practice,” Bacani said.
Regulators involved include Britain’s Prudential Regulation Authority and the California Department of Insurance as well as those from Australia, Brazil, Colombia, the European Union, Singapore and the U.S. states of Illinois and Washington.
Other United Nations-backed coalitions of financial firms are also scrambling to stem members fleeing. Reuters reported last month that the Net-Zero Banking Alliance (NZBA), whose 143 members oversee $74 trillion in capital, is proposing its members disclose more information on their commitments to tackle climate change without requiring them to coordinate action, in a compromise it hopes will prevent departures.
(Reporting by Simon Jessop in London; editing by Greg Roumeliotis and Michael Erman)
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