More insurers are deserting the net zero alliance as the UN climate group sounds the alarm

LONDON, May 26 (Reuters) – Lloyd’s of London became the sixth organization to quit a net zero alliance for insurers within 36 hours on Friday, as a UN-backed coalition of financial groups warned against fallout from “political attacks” on insurers. in the USA.

On Friday, Lloyd’s joined QBE Insurance (QBE.AX) in withdrawing from the Net-Zero Insurance Alliance (NZIA). Germany’s Allianz (ALVG.DE), France’s AXA (AXAF.PA) and SCOR (SCOR.PA) and Japan’s SOMPO Holdings (8630.T) left the day before following further accusations from Republican attorneys general Americans that insurers are violating antitrust laws.

The NZIA has now lost a fifth of its members in a week – all major global insurers – and 10 in total have quit since March, when it had 30 members.

The exodus raises questions about the viability of the coalition, which was formed in 2021 and demands that insurers commit to reducing greenhouse gas emissions in their underwriting portfolios to net zero by 2050.

None of those who quit this week explained their decision, but sources familiar with the talks said insurers feared they could be drawn into disputes with some Republicans.

“These political attacks are now interfering with insurers’ independent efforts to price climate risk, which will harm policyholders, high street investors and local economies,” said a spokesperson for the Glasgow Financial Alliance for Net Zero. (GFANZ), which was launched by former Bank of England Governor Mark Carney, said in a statement on Friday.

Lloyd’s of London CEO John Neal told Reuters earlier this week that the alliance needed to make its membership rules less prescriptive or it risked collapse. A spokesman for Lloyd’s said on Friday the insurance market remained committed to its sustainability strategy.

NZIA members held a call on Thursday in which some, including Britain’s Aviva (AV.L), urged the alliance to continue while acknowledging it needed to find a solution before other companies quit , said a person who participated in the call.

Renaud Guidée of AXA, its group risk director and until this week the chairman of NZIA, told members the French insurer was leaving the alliance with a heavy heart as he felt his presence would be a distraction. given the attention of US Republicans, the person told Reuters. .

“We are saddened by recent developments and will work with the UN and other members to seek an orderly resolution,” an Aviva spokesperson said in an emailed statement. The spokesperson said the NZIA had played an important role in developing standards and frameworks for insurers trying to achieve net zero.

AXA did not respond to requests for comment.

GFANZ is expected to speak individually with the remaining NZIA members and another call of members is scheduled for next week, the person added during Thursday’s call.

Some Republican politicians have launched a campaign against financial institutions that collaborate to try to reduce carbon emissions, part of a broader backlash against companies using environmental, social and governance (ESG) factors in their decision making.

Vanguard, one of the world’s largest asset managers, quit another alliance for fund managers in December, citing a need for independence, although other GFANZ groups largely resisted the pressure.

REMAINING MEMBERS

The exodus left NZIA with 21 members according to its website, many of which are small insurance companies.

Legal experts say it would be difficult to bring claims against insurers for breaching antitrust laws, and NZIA took legal advice when setting requirements for members. But insurers fear a confrontation with American Republicans.

Consumers’ Research, a US-based activist group that has been highly critical of ESG policies, said on Thursday it would use a mobile billboard outside members’ US offices. the NZIA to get them to quit.

Most of those who have left NZIA have major American businesses. Some of these insurers also remain members of another GFANZ group, the Net-Zero Asset Owners Alliance.

Leaving insurers, who have mostly declined to explain why they are leaving, say they remain committed to reducing emissions from their underwriting.

“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 UN climate summit, COP26, in Glasgow.

Reporting by Tommy Reggiori Wilkes; Editing by Susan Fenton, Paul Simao, Nick Zieminski and Mark Potter

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