Eight of the world’s leading insurers and reinsurers have committed to transition their underwriting portfolios to net-zero greenhouse gas emissions by 2050 with the formation of a new initiative.
Members of the the UN-convened Net-Zero Insurance Alliance (NZIA) will each set science-based intermediate targets for net-zero emissions every five years, and independently report on their progress publicly and annually.
They will also advocate for, and engage in, governmental policies for a science-based and socially just transition of economic sectors to net zero.
This is the fourth major net-zero alliance launched in the financial sector over the last two years following the establishment of the Glasgow Financial Alliance for Net Zero, Net-Zero Banking Alliance and Net-Zero Asset Owner Alliance.
Founding members of the NZIA include AXA, Allianz, Aviva, Generali, Munich Re, SCOR, Swiss Re and Zurich Insurance Group.
“Through the Net-Zero Asset Owner Alliance launched in 2019, insurers and reinsurers are already working towards decarbonising their investment portfolios in line with climate science and the Paris Agreement,” said Thomas Buberl, CEO of the AXA Group.
“With this new NZIA 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.”
The NZIA's statement of commitment is a comprehensive framework which considers the latest available scientific knowledge and associated social impacts, as well as findings of recognised reports such as those by the Intergovernmental Panel on Climate Change.
Setting underwriting criteria and guidelines for the most emissions-intensive activities within their portfolios, and developing insurance solutions for low-emission technologies and nature-based solutions that absorb emissions, are among the commitments.
In the run up to COP26 climate summit this November in Glasgow, the NZIA membership is expected to grow to include insurers, reinsurers, brokers and insurance market bodies from across the globe.
“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,” said Mark Carney, former governor of the Bank of England and the UK prime minister’s finance adviser for COP26.
“By committing to join the gold standard alliance for net zero, the NZIA will ultimately make underwriting contingent on underlying companies having credible net-zero transition strategies.”
Image credit: iStock
Author: Chris Seekings