Insurers leave climate alliance after ESG backlash in US

Insurers leave climate alliance after ESG backlash in US

  • NZIA Chairman AXA, Allianz and SCOR leave Allianz
  • Group convened by United Nations calls for future
  • Some US Republicans have accused NZIA of antitrust violations

LONDON/FRANKFURT, May 25 (Portal) – A United Nations-convened climate alliance for insurers saw at least three more departures on Thursday, including the group’s chairmanship, as insurers grow frightened by opposition from Republican politicians in the US.

At least seven members of the Net-Zero Insurance Alliance (NZIA), which was launched in 2021, have now left, including five of the eight founding signatories.

Also among the departures on Thursday was AXA, whose group chief risk officer, Renaud Guidée, chaired the alliance. The French insurer said in a statement that it was leaving the company to “continue its individual sustainability journey”. The German Allianz (ALVG.DE) and the French reinsurer SCOR (SCOR.PA) also quit.

NZIA, part of the Glasgow Financial Alliance for Net Zero, launched by UN climate chief Mark Carney, requires members to commit to reducing their greenhouse gas emissions.

The group has been rocked by growing political opposition from some Republicans in the United States, who say the group could break antitrust laws by working together to reduce its customers’ carbon emissions.

This month, 23 US federal prosecutors told NZIA members that the group’s goals and requirements appear to violate both federal and state antitrust laws.

They gave insurers a month to respond in a May 15 letter — the latest Republican salvo against financial institutions that incorporate environmental, social and governance (ESG) factors into their decisions.

NZIA members held talks on Thursday to discuss the alliance’s options, sources familiar with the group said.

John Neal, CEO of Lloyd’s of London, a member, told Portal on Wednesday that the alliance needed to make its membership rules less stringent or risk falling apart.

An NZIA spokesman did not respond to requests for comment.

It still has 23 members, including Aviva, Lloyd’s and Tokio Marine Holdings, according to the NZIA website. Most of those who have left the country have large US companies, but some of those who remain have large companies as well.

“We have to wonder if their exit from Allianz has more to do with fear of losing business in the US than actual legal jeopardy,” said Patrick McCully, senior analyst at campaign group Reclaim Finance.

“Real climate leaders must fight climate denial, not give in to it. It is now crucial that insurers do not reverse their existing climate promises. If they cannot act together, they must act alone.”

While other financial industry alliances, including one for banks, haven’t seen many exits, the departure of so many of the world’s largest insurers is a blow to the United Nations-led effort to harness the power of converging financial institutions to curb issuance to lower.

Legal experts told Portal it was difficult to bring a lawsuit under the antitrust rules against a company working as part of an alliance to fight climate change.

The political backlash in parts of the United States has made insurers particularly sensitive to such allegations.

Insurers that have left the NZIA, including Swiss Re (SRENH.S), Munich Re (MUVGn.DE), Zurich Insurance (ZURN.S) and Hannover Re (HNRGn.DE), say their departures have impacted their individual Commitments to not changing will deal with climate change.

The alliance said in an email statement on Thursday that it had decided to withdraw from the NZIA and stick to its own climate goals.

SCOR’s new CEO announced his resignation and some new policies on the climate and energy transition at his annual general meeting on Thursday. A SCOR spokesman declined to give a reason for the departure.

Reporting by Tommy Reggiori Wilkes in London and Alexander Hübner and Tom Sims in Frankfurt. Edited by Kirsten Donovan, Matthew Lewis and Richard Chang

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Tom Sims

Covers German finance with a focus on big banks, insurance, regulation and financial crime, previous experience at the Wall Street Journal and The New York Times in Europe and Asia.