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Big insurers are in discussions about overhauling a climate-related alliance that was deserted by key members after a US political backlash last year, recasting it as a broader forum to address negative perceptions.
The Net-Zero Insurance Alliance is a UN-convened body that commits insurers and reinsurers to reducing greenhouse gas emissions tied to their underwriting, as part of a finance sector initiative led by former Bank of England governor Mark Carney.
It suffered an exodus after threats from right-wing politicians in the US and anti-ESG activists that the insurers could be in breach of antitrust laws.
The alliance’s remaining members have since held talks on whether the group could be reconstituted and widened to include regulators and brokers to establish best practice on how to calculate and reduce the sector’s carbon impact, according to people familiar with the matter.
Existing members, which include UK’s Aviva and Italy’s Generali, were “fully committed to the net zero transition and are engaging with a broader community of stakeholders on the evolution of the NZIA”, a spokesperson said. The alliance’s commitments are non-binding, however.
“The forum will be able to explore decarbonisation approaches by involving key sectoral players such as insurers, reinsurers, brokers, regulators and campaign groups,” said one person at an alliance member. Another member said this would allow it to show it had “nothing to hide, having the regulators involved”.
Lindsay Keenan, a senior strategist at climate advocacy organisation The Sunrise Project, welcomed the idea that regulators, brokers and others were “joining the discussion”, but urged insurers at the same time to “adopt fossil fuel exclusions to live up to their net zero pledges”.
Almost 200 countries at the UN COP28 climate summit in Dubai in December agreed to transition away from fossil fuels by 2050, but fell short of agreeing to phase out new oil, gas and coal projects.
The chief executive of Lloyd’s of London, John Neal, told the Financial Times recently that he blamed the crisis at the NZIA, established in 2021, on “European thinking” that pushed all of its members into “immediate actions”, without a global political consensus on a timeline for cutting emissions.
Neal said insurers should dispense with joint “frameworks and protocols” on the underwriting of fossil-fuel companies.
“Governments have got to decide what the policy is and the timeframe for the policy, I don’t think it’s for the private sector to dive into that conversation,” Neal added.
Instead, he said, they should focus on supporting the energy transition, by creating new types of insurance coverage that support key technologies and companies involved.
Neal said that the Sustainable Markets Initiative, whose insurance chapter he chairs, could provide a platform for insurers to collaborate with each other as well as with leaders from finance, agribusiness and industry.
The SMI, a private-sector grouping of chief executives, highlighted what it believed to be insurance industry gaps in a report issued last year.
It pointed out, for example, that few insurers provided full coverage for the production of green hydrogen, as a less mature industry, where electricity produced using renewable sources such as wind and solar is used to extract hydrogen from water.
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