Eight insurance and reinsurance companies have launched the Net-Zero Insurance Alliance (NZIA).
The alliance commits the companies’ underwriting portfolios to net-zero greenhouse gas emissions by 2050, consistent with a maximum temperature rise of 1.5°C above pre-industrial levels by 2100.
AXA, chairing the NZIA, is joined by Allianz, Aviva, Generali, Munich Re, SCOR, Swiss Re and Zurich Insurance Group.
The NZIA has been convened under the UN’s Environment Programme Finance Initiative Principles for Sustainable Insurance. The announcement was timed for the G20 Climate Summit that took place in Venice on 11 July.
“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 AXA Group.
“With this new Net-Zero Insurance Alliance, 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,” he added.
In a joint statement the eight companies said the alliance was committing to build on climate leadership as investors through their existing membership of the UN-convened Net-Zero Asset Owner Alliance, established in 2019.
The new commitment adds an underwriting commitment to previous green investment promises. In their investment portfolios, all eight NZIA founding members are already individually setting science-based 2025 decarbonisation targets, in line with a net-zero transition pathway.
Based on their new NZIA commitment, the companies said they would individually set science-based intermediate targets every five years and independently report on their progress publicly and annually. The companies also said they would lobby and work with governments for a science-based and socially just transition of economic sectors to net zero.
“For generations, the insurance industry has served as society’s early warning system and risk manager by understanding, reducing, pricing and carrying risk,” ,” said Inger Andersen, executive director of the UN Environment Programme.
“As we approach COP26 in Glasgow, the risks posed by global heating are escalating and the world is a long way from meeting the promises made when the Paris Climate Agreement was forged nearly six years ago,” Andersen added.
The NZIA membership is expected to grow to include more insurance market companies in the months before the COP26 event in November.
The NZIA said it is now preparing to join the UN Race to Zero campaign in order to become officially part of the Glasgow Financial Alliance for Net Zero, which brings together the leading net-zero initiatives across the financial system.
“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, the UN special envoy on climate action and finance, the UK Prime Minister’s finance adviser for COP26, and chair of the Glasgow Financial Alliance for Net Zero.
“By committing to join the gold standard alliance for net zero, the Net-Zero Insurance Alliance will ultimately make underwriting contingent on underlying companies having credible net-zero transition strategies,” he added.