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LONDON (Reuters) - “Political attacks” are interfering with insurers’ efforts to price climate risks, a U.N.-backed coalition of financial groups said on Friday, after five insurers quit an industry climate body within 24 hours following pressure in the United States.
Australia’s QBE Insurance said on Friday it had left the Net-Zero Insurance Alliance (NZIA), joining Germany’s Allianz, France’s AXA and SCOR and Japan’s SOMPO Holdings, which left after accusations from U.S. Republican attorney generals that insurers 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 the U.N-backed Glasgow Financial Alliance for Net Zero (GFANZ), which was launched by former Bank of England Governor Mark Carney, said in a statement.
Nine big insurers have now left NZIA in less than two months, an exodus that has raised questions about the viability of the coalition, which was formed in 2021 and requires members to commit to reducing greenhouse gas emissions in their investment portfolios to a net-zero level 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 a call on Thursday where some including Britain’s Aviva urged the alliance to keep going while acknowledging it needed to find a solution before more firms quit, a person who was on the call said.
AXA’s Renaud Guidée, its Group Chief Risk Officer and until this week the NZIA Chair, told members the French insurer was leaving the alliance with a heavy heart because it felt its presence would be a distraction given the focus of U.S. Republicans, the person told Reuters.
“We are saddened by recent developments and will work with the U.N. and other members to seek an orderly resolution,” an Aviva spokesperson said in an emailed statement. The spokesperson said NZIA had played an important role developing standards and frameworks for insurers trying to meet net zero.
AXA did not respond to requests for comment.
GFANZ is expected to speak with remaining NZIA members individually and another members’ call is scheduled for next week, the person on Thursday’s call added.
Some Republican politicians have mounted a campaign against financial institutions collaborating to try to rein in carbon emissions, part of a broader pushback 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 its website, the NZIA now has 22 members including 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 taken legal advice when setting requirements for members. But insurers are worried about a showdown with U.S. Republicans.
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 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 insurers that have quit also remain members of another GFANZ group, the Net-Zero Asset Owners Alliance.
Departing insurers, which have mostly declined to explain why they are leaving, say they remain committed to reducing emissions from their underwriting. A SOMPO spokesperson said the company’s net-zero commitment remained “solid and unchanged”.
“Despite these political headwinds, we will continue to support insurers’ efforts to manage climate risk and develop transition plans,” the GFANZ spokesperson said.
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 Susan Fenton, Paul Simao and Mark Potter
