Will the withdrawal of Munich Re and Zurich from the Net-Zero Insurance Alliance (NZIA) actually make it easier for them – and the rest of the world – to reach net-zero emissions?
That certainly seems the implication from the explanations given by the two firms as they quit the group they helped found in 2021.
Both claim to remain committed to their net-zero by 2050 goals. So where is the harm in remaining part of an organisation whose main goal is to establish a common language to reach a shared ambition?
One clue might be in Munich Re's fear of "exposing ourselves to material antitrust risks".
In the US, antitrust laws are being weaponised by right-wing groups in their crusade against ESG factors being considered by financial firms. Approximately a quarter of Munich Re's reinsurance business is in the US, and Zurich has a considerable presence in the country through its ownership of Farmers Insurance.
If the NZIA is weakened because of a culture war, that will be deeply disappointing to many.
The question of antitrust was raised early on in the formation of the NZIA. It was the principle reason why the group – much to the chagrin of environmental lobbyists – decided firms would be allowed to choose their own targets, rather than commit to goals devised by the alliance.
But if antitrust is really a concern, why do Zurich and Munich Re remain members of the Net Zero Asset Owner Alliance, the group the NZIA was modelled on?
The timing of the withdrawals is also unfortunate. The NZIA only published its target-setting protocol in January, which put firms on an ambitious timetable to announce their first targets by June of this year. While environmentalists attacked the weak demands of the protocol, it was nonetheless evidence of progress in a sector that arrived late to the climate action party.
So what does the future hold? At the time of writing, Aviva, Generali, NN and Intesa Sanpaolo have reaffirmed their commitment to the NZIA. Worryingly, Axa, Swiss Re, Fidelis and Hannover Re declined to comment when asked about their loyalty to the project. Neither has the NZIA itself offered comment. More will no doubt emerge over the coming days.
Without a convening organisation, the sector will likely end up with an inconsistent approach to reducing emissions. This will make it harder for stakeholders to understand and hold firms to account, and for firms to compare their efforts with others.
The threat of litigation being used to counter individual and collective environmental ambitions is real. Last month, Aviva's chief executive Amanda Blanc called for a "safe environment" for firms to develop new disclosures on transition plans without fear of legal action.
Legislators around the world should be listening, otherwise we may only hear silence on climate ambitions in the future.
Christopher Cundy
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