European insurers say US backlash has damaged climate change push
The heads of Europe’s largest insurers have warned that a growing political backlash in the US has jeopardised their ability to join forces to combat climate change.
The industry’s effort to tackle carbon emissions collectively culminated two years ago in the establishment of the Net-Zero Insurance Alliance, a UN-backed group of insurers that promised to shrink the emissions linked to their underwriting.
However, its future has been in doubt since May when a letter from 23 Republican state attorneys-general said that by setting joint targets the alliance appeared to violate antitrust laws, sparking an exodus from the group.
The legal threat came amid increasing opposition among some Republican politicians to companies and investors pursuing environmental activism, which they say is hostile to the oil and gas industry and hurting the wider economy.
Legislation designed to thwart environmental, social and governance investing and financing has been adopted in several states, including Florida and Texas.
Axa, one of Europe’s biggest insurers, was a founding member of the NZIA but left in May. Its chief executive Thomas Buberl told the Financial Times that “my job is to manage insurance and not to deal . . . with 23 attorneys-general in the US”.
It was “far more powerful” to act collectively on climate, he said, but he added: “You also have to at some point say to yourself, OK, where are your priorities? Is there a different way of getting to the same result with less hassle?” Since leaving the group, Axa has published some emission targets of its own.
Buberl’s concern was echoed by Christian Mumenthaler, chief executive at reinsurer Swiss Re, which also quit the group in May.
“It’s clear that in today’s political environment, it remains very difficult: there remains some political risk, some legal risk. Then the question is, OK, for the overall cause, how much is it adding?”
Mumenthaler said that individual companies would continue to pursue strategies to curb emissions linked to their insurance policies.
But the UN Environment Programme Finance Initiative, which backs the NZIA, said that joint action was more powerful in driving policy. It is not “something which is easily facilitated on an individual company-by-company basis”, it added.
In recent years, insurers have faced increasing pressure from activists, as well as ESG-focused investors, to stop insuring polluting industries such as coal. The move by big insurers and reinsurers to abandon collective efforts to curb emissions has drawn criticism from climate change campaigners, who claimed that the decision had more to do with a fear of losing business in the US.
Mario Greco, who heads Swiss insurance company Zurich, attacked the “lack of political support” from US and other governments for taking action on climate. Collective action by the industry on climate was no longer “possible” following the demise of the NZIA, he told the FT.
“You have to go back to what you stand for yourself, and you take responsibility for what you want to do yourself,” Greco said, adding that Zurich would stand by its sustainability commitments.
The NZIA was set as part of former Bank of England governor Mark Carney’s umbrella group, the Glasgow Financial Alliance for Net Zero. Members had collectively pledged to reduce the emissions associated with their policies and to report publicly on their progress.
Only Italy’s Generali and the UK’s Aviva are left of its eight founding members.
John Neal, the chief executive of Lloyd’s of London, the specialist insurance market, said the alliance had set more demanding targets than some US insurers could support but that it was too early to write off the industry’s trying to take collective action in the future
“You need to create a somewhat easier framework if you want it to be truly global,” he said.
Additional reporting by Patrick Temple-West
Climate Capital
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This story originally appeared on: Financial Times - Author:Ian Smith
