The United Nations (UN) has revealed the Net-Zero Insurance Alliance (NZIA) has removed all requirements for its members to establish or disclose greenhouse gas emission reduction targets.
The significant revision to the alliance’s rules comes as a response to political pressure from the United States, which led to the departure of several members.
The NZIA is among the UN-backed coalitions aiming to unite financial institutions in their efforts to achieve net zero carbon emissions by 2050. However, this year, the alliance has faced criticism from Republican politicians in the US who accuse it of violating antitrust regulations and driving up insurance costs.
In May, attorneys general from 23 Republican-led US states sent a letter threatening legal action, resulting in over half of NZIA’s members leaving due to concerns about regulatory consequences and litigation.
“Going forward, NZIA member companies have no obligation to set or publish targets: rather, individual member companies will be responsible and publicly accountable for any targets they set, the methodologies used to set them, the timeline on which they decide to publish any targets, and the progress they are making,” the UN Environment Programme (UNEP) said in a statement.
Under the NZIA’s “Target-Setting Protocol” published in January, insurance members had until end-July to publish emissions targets for 2030 using recommended types of targets and were then required to update on their progress annually.
Environmental activists, who believe insurers are not adequately reducing emissions associated with their underwriting activities, may be alarmed by the significant weakening of membership rules. Some campaigners argue that removing target-setting requirements reduces the NZIA to a mere forum for discussion and highlights the alliance’s minimal demands compared to other UN financial industry groups.
Nevertheless, both members and non-members have asserted their commitment to achieving net zero emissions by 2050 and pledged to independently publish emissions targets, along with regular progress updates. For instance, AXA, a French company, recently announced its initial emission reduction goals for its insurance portfolio.
While the NZIA will encourage both members and non-members to adopt its target-setting protocol and methodologies, the UNEP clarified that the protocol will now serve as a voluntary best practice guide for developing and comparing decarbonisation targets.
“Each company who chooses to be a member of the NZIA unilaterally and independently decides on the steps on its path towards net zero,” said UNEP. “NZIA membership does not involve any coordinated competitive conduct or exchanges of competitively sensitive information.”
“NZIA members remain committed to the net-zero transition and are engaging with a broader community of stakeholders on the future evolution of the NZIA,” it added.
