More insurers desert the Net Zero Alliance as the UN climate group sounds the alarm

LONDON (Reuters) – Lloyd’s of London became the sixth organization to pull out of the Net Zero alliance of insurers in 36 hours on Friday, as a United Nations-backed coalition of financial groups warned of the repercussions of “political attacks” on insurers. in the United States of America.

Lloyd’s joined Australia’s QBE Insurance (QBE.AX) in withdrawing from the Net-Zero Insurance Alliance (NZIA) on Friday. Germany’s Allianz (ALVG.DE), France’s AXA (AXAF.PA), SCOR (SCOR.PA) and Japan’s SOMPO Holdings (8630.T) left the day before after more accusations from Republican US prosecutors that the insurance companies were violating laws Antitrust.

NZIA has now lost five of its members in a week – all major global insurers – and a total of 10 have resigned since March, when it reached 30 members.

The migration raises questions about the viability of the alliance, which was formed in 2021 and requires insurers to commit to reducing greenhouse gas emissions in their underwriting portfolios to net zero by 2050.

None of those who resigned this week explained their decision, but sources familiar with the discussions say the insurers have flagged concerns about getting caught up in disagreements with some Republicans.

“These political attacks are now interfering with the independent efforts of insurers to price in climate risk, which will hurt policyholders and key investors on the streets and local economies,” a spokesperson for the UN-backed Glasgow Financial Alliance for Net Zero (GFANZ), which launched from Former Bank of England Governor Mark Carney accepted, in a statement on Friday.

John Neal, chief executive of Lloyd’s of London, told Reuters earlier this week that the alliance needed to make its membership rules less prescriptive or risk collapsing. A Lloyd’s spokesperson said Friday that the insurance market remains committed to its sustainability strategy.

NZIA members held a call on Thursday where some including Britain’s Aviva (AV.L) urged the alliance to continue while recognizing that it needed to find a solution before more companies resigned, said a person on the call.

AXA’s Renaud Guede, the group’s head of risk management and until this week the head of NZIA, told Reuters the French insurer would sadly leave the alliance because it felt its presence would be a distraction given the focus of US Republicans, the source told Reuters. .

“We are saddened by the recent developments and will work with the United Nations and other members to find an orderly solution,” an Aviva spokesperson said in an emailed statement. The spokesperson said NZIA had played an important role in developing standards and frameworks for insurers trying to achieve net zero.

AXA did not respond to requests for comment.

The person added on Thursday’s call that GFANZ is expected to speak with the remaining NZIA members individually and a call to other members is scheduled for next week.

Some Republican politicians have campaigned against corporate financial institutions in an effort to reduce carbon emissions, as part of a broader backlash against companies that use environmental, social and governance (ESG) factors in decision-making.

Vanguard, one of the world’s largest asset managers, in December left another alliance of fund managers, citing a need for independence, though other GFANZ groups have largely withstood the pressure.

remaining members

According to its website, Exodus left 21 members, many of them smaller insurers.

Legal experts say it would be difficult to sue insurers for breaching antitrust laws, and NZIA has taken legal advice when determining requirements for members. But insurance companies are worried about a confrontation with the American Republicans.

Consumer Research, a US-based activist group highly critical of ESG policies, said on Thursday it would use a portable billboard outside NZIA members’ offices in the US to pressure them to resign.

Most of those who leave NZIA have large businesses in the US. Some of these insurers also remain members of another GFANZ group, the Net-Zero Asset Owners Alliance.

The departing insurers, who have mostly refused to explain why they left, say they remain committed to reducing emissions from their insurance.

“Despite these political headwinds, we will continue to support insurers’ efforts to manage climate risks and develop transition plans,” said a GFANZ spokesperson.

GFANZ, which Carney will chair, will be launched in 2021 ahead of the United Nations Climate Summit, COP26, in Glasgow.

(Reporting by Tommy Rigiore-Wilkes) Editing by Susan Fenton, Paul Simao, Nick Zieminski and Mark Potter

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