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LONDON (Reuters) -“Political attacks” are interfering with insurers’ efforts to price climate risks, the Glasgow Financial Alliance for Net Zero (GFANZ) said on Friday, after a wave of insurers quit an industry climate group following pressure in the United States.
Allianz, AXA and SCOR, three of Europe’s biggest insurance firms, on Thursday became the latest insurers to quit the Net-Zero Insurance Alliance (NZIA) following accusations from some U.S. Republican attorney generals that they are violating antitrust laws.
“These political attacks are now interfering with insurers’ independent efforts to price climate risk, which will harm policyholders, main street investors and local economies,” a spokesperson for GFANZ, a United Nations-backed coalition of financial institutions launched by ex-Bank of England Governor Mark Carney, said in a statement.
Japan’s SOMPO Holdings, a major Asian insurer, has also left the NZIA, becoming at least the eighth insurer to quit in less than two months and the first outside of Europe. A SOMPO spokesperson did not provide a reason for its exit but said the company’s commitment to net zero remained “solid and unchanged”.
The exodus of some of the world’s biggest insurers has raised questions about the viability of the NZIA, which was formed in 2021 and requires members to commit to reducing their portfolio greenhouse gas emissions to a net zero by 2050.
Lloyd’s of London CEO John Neal told Reuters this week the alliance needed to make its membership rules less prescriptive or it risked falling apart.
Members of NZIA held several calls this week on the alliance’s options, sources say.
Some Republican politicians have mounted a campaign against financial institutions collaborating to try and rein in carbon emissions, part of a broader push back against businesses using environmental, social and governance-related (ESG) factors in their decision-making.
Vanguard, one of the world’s biggest asset managers, in December left another alliance for fund managers, citing a need for independence, although other GFANZ groups have largely withstood the pressure.
According to the NZIA website, it now has 23 members including Britain’s Aviva and Lloyd’s of London and Japan’s Tokio Marine Holdings.
Legal experts say it would be hard to make a legal case against insurers for breaching antitrust laws, and the NZIA has sought legal advice when setting requirements for members. But insurers are worried about a showdown with Republicans mounting a high-profile campaign.
Consumers’ Research, a U.S.-based activist group that has been highly critical of ESG policies, said on Thursday it would use a mobile billboard outside of NZIA members’ U.S. offices to pressure them to quit.
Most of those that have left the NZIA have sizeable U.S. businesses, but so do some of those still in the group. Some of the insurers to have quit also remain part of other GFANZ alliances.
“Despite these political headwinds, we will continue to support insurers’ efforts to manage climate risk and develop transition plans,” the GFANZ spokesperson said in the statement.
GFANZ, co-chaired by Carney, was launched in 2021 ahead of the U.N. climate summit, COP26, in Glasgow.
Reporting by Tommy Reggiori Wilkes; editing by Simon Jessop, Conor Humphries and Susan Fenton
