Insurance giants team up for net-zero alliance, but are urged to stop supporting fossil fuels
AXA, Allianz, Aviva, Generali, Munich Re, SCOR, Swiss Re and Zurich Insurance Group have launched a new 'Net-Zero Insurance Alliance', of which members will be required to deliver net-zero emissions by 2050 across their insurance and reinsurance portfolios.
The eight founding members of the Alliance are all members of the UN-convened Net-Zero Asset Owner Alliance already and have all either set science-based targets for decarbonising their portfolios in line with net-zero by mid-century or announced their intention to do so.
In a Statement of Commitment for the newly-founded Alliance, they have signalled their intention to go beyond these in-house goals and to advocate for national policies that would enable a “socially just transition of economic sectors to net-zero".
The Statement outlines that members will advocate for mandatory corporate disclosure frameworks that are "relevant to the net-zero transition and the insurance industry", including the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) and the Taskforce on Nature-related Financial Disclosures (TNFD). They will also support national policies and international agreements that are credibly aligned with the UN's Sustainable Development Goals (SDGs).
The Statement also contains additional detail on how the insurers will achieve their own individual net-zero goals. It outlines how members should publish 2025 targets for decarbonisation within six months of joining the initiative; develop sector-specific emissions pathways to 1.5C for high-emitting industries; measure decarbonisation-related and climate-related risks and opportunities and launch dedicated insurance and/or reinsurance products for low-emission and zero-emission technologies and nature-based solutions.
There is also an overarching commitment for insurers to take heed of the roadmap to net-zero by 2050 published by the International Energy Agency (IEA) this year. That roadmap states that investment for new coal plants without measures to abate emissions and future fossil fuel supply projects – especially more aggressive projects such as tar sands and arctic drilling - should be halted immediately. It also states that no new petrol or diesel cars should be sold after 2035.
“For generations, the insurance industry has served as society’s early warning system and risk manager by understanding, reducing, pricing and carrying risk," the UN Environment Programme's (UNEP) director Inder Andersen said.
"As we approach COP26 in Glasgow, the risks posed by global heating are escalating and the world is a long way from meeting the promises made when the Paris Climate Agreement was forged nearly six years ago. Along with governments, the insurance industry and wider financial sector have the power and responsibility to drive progress towards a net-zero economy and a sustainable future for all.
"Guided by science, I am pleased to see leading insurers embed the net-zero ambition in their core insurance business. I urge the rest of the global insurance industry to respond to the climate emergency and urgently follow the example set by the founding members of this pioneering Alliance.”
The new Alliance will notably become a member of the Glasgow Financial Alliance for Net-Zero (GFANZ) - a new initiative from the US and UK Governments, designed to unite the global financial sector on the net-zero transition around COP26. As such, its commitments will need to be accredited by the UN's Race to Zero campaign, which recently tightened its net-zero criteria following concerns about greenwashing.
Fossil fuel to the fire
Campaign coalition Insure Our Future has stated that it "cautiously" welcomes the formation of the new Alliance. In a statement, the organisation said it is glad that the Alliance's Statement of Commitment covers emissions across all scopes, including indirect (Scope 3) emissions.
However, Insure Our Future is now calling on all Alliance members to phase out support for new fossil fuels, as per the IEA's recommendations. It also wants the Alliance to do more to ensure that further joiners strengthen their stance on fossil fuel insurance and reinsurance.
"In particular, it is concerning to see that no minimum requirement on coal underwriting has been set to join the Alliance, whereas all founding members have already committed to stop insuring such projects," Reclaim Finance's insurance campaigner Erwan Malary said.
Urgewald Insurance Campaigner Regine Richter also pointed to the fact that Allianz, AXA, Munich Re and Zurich are all classed as major oil and gas property and casualty insurers.
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