Eight of the world’s largest insurers have this afternoon launched a net zero initiative for the insurance sector, pledging to align their underwriting activities with the 1.5C warming pathway set out in the Paris Agreement by mid-century.
Axa, Allianz, Aviva, Munich Re, and Swiss Re are among the founding members of the group, which brings together firms that have committed to transition their insurance and reinsurance underwriting portfolios to net zero greenhouse gas emissions by 2050 and to set science-based interim targets every five years.
The group was launched this afternoon as leaders of developed economies gathered for a G20 Climate Summit in Venice, some seven months after plans for a ‘net zero underwriting alliance’ were first unveiled.
The Net Zero Insurance Alliance (NZIA), which also includes Generali, SCOR, and Zurich Insurance Group, said it expected its membership to swell over the coming months in the lead up to the COP26 Climate Summit this November. Membership is open to insurers, reinsurers, brokers, and insurance market bodies, according to an update from the group.
“With this new Net Zero Insurance Alliance, we are raising our climate ambition further by using our underwriting, claims, and risk management practices to help ensure and enable the transition to a resilient net-zero global economy,” said Axa chief executive Thomas Buberl.
The group is the fourth major net zero alliance to have been launched in the financial sector over the last two years, following in the footsteps of the Net Zero Asset Owner Alliance in September 2019, the Net Zero Asset Managers last December, and the Net Zero Banking Alliance in April.
The NZIA said it now aimed to join the wider Glasgow Financial Alliance for Net Zero, the group chaired by Mark Carney that brings together net zero initiatives across the financial system, once it become accredited as an official member of the UN Race to Zero campaign.
Carney today applauded the launch of the new group, noting the insurance sector would play a critical role in putting the global economy on a pathway to net zero emissions.
“Having a global financial system where every professional decision takes climate change into account requires harnessing the full role of the insurance industry as risk managers, insurers and investors for climate action,” he said. “By committing to join the gold standard alliance for net zero, the Net Zero Insurance Alliance will ultimately make underwriting contingent on underlying companies having credible net zero transition strategies.”
Inger Anderson, executive director of the United Nations Environment Programme, said the insurance sector’s detailed understanding of risk gave it a unique perspective on the climate crisis.
“For generations, the insurance industry has served as society’s early warning system and risk manager by understanding, reducing, pricing and carrying risk,” she 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.”
Insurance firms have faced growing calls to pay closer attention to escalating climate risks and accelerate a rapid shift away from fossil fuel production and extraction by refusing to cover certain projects. While progress has been made in curbing the coal industry’s access to cover – in the past three years nearly two dozen major insurers have adopted policies that end or limit insurance for the fossil fuel – insurers continue to play a crucial role in providing insurance for environmentally destructive oil and gas projects.