At the 2021 G20 Climate Summit in Italy, eight major insurance companies — AXA, Allianz, Aviva, Generali, Munich Re, SCOR, Swiss Re and Zurich — established the United Nations’ Net-Zero Insurance Alliance (NZIA). Subsequently, many smaller insurers joined. By May 2023, however, AXA, Allianz, Munich Re, SCOR, Swiss Re and Zurich had all left the alliance. 

A statement from the UN pointed to “recent discussions within the United States” as a deciding factor for many. Essentially, Republican politicians in the US suggested that by working together to influence clients to reduce their carbon emissions, NZIA members might be violating antitrust laws.

With only 11 members as of January 2024, is the NZIA still a force for good in the insurance sector? How has leaving the alliance impacted former members, and where are insurers in their journeys to net zero?

Progress being made

“There has been some modest progress towards achieving net zero; however, momentum has slowed,” says Peter Bosshard, co-ordinator of the global Insure Our Future campaign. 

“Insurers that joined the Net-Zero Insurance Alliance committed to publishing transition plans — decarbonisation targets and organisational plans about how they will achieve these targets over the short, medium and long term, by the [northern hemisphere] summer of 2023. If every alliance member prepared a transition plan and set targets, we could then compare them and see what Company A is doing and consider why Company B has a more ambitious target. It would have created some peer pressure.

“However, out of the 31 insurers who were or are part of the alliance, we’re only aware of seven that have published such plans.” These include Allianz, AXA, Fidelis, NN Group, SCOR and Tokio Marine. In July 2023, the UN changed NZIA’s rules so that members were no longer required to set or publish emission targets and plans.

Still committed

In addition to Allianz’s transition plan, its Australian arm is making significant strides towards the organisation’s net zero goals, according to Sema Whittle, general manager, Corporate Governance and Sustainability at Allianz Australia. She points to a reduction of just over 70 per cent in greenhouse gas emissions since 2019 in its operations, which includes paper, waste, travel and energy. Plus, Allianz Australia already sources the equivalent of 100 per cent renewable energy for its operations from various sources.

Like Allianz, IAG left the alliance in June 2023 but says the move hasn’t changed the organisation’s approach to achieving net zero. In fact, the insurer won the Excellence in Environmental, Social and Governance (ESG) Change category at the 2023 ANZIIF Australian Insurance Industry Awards.

As Lee McDougall, IAG executive manager, Group Sustainability and Climate Action, explains, “Our membership with the NZIA helped us to better understand the role we can play to decarbonise our insurance portfolios. 

“The work of the NZIA on the insurance-associated emissions methodology and target setting was particularly useful to help insurers prepare for meeting net zero commitments, transition our businesses and deliver on stakeholder expectations, including upcoming mandatory climate reporting.”  

In New Zealand, 38 per cent of IAG’s vehicle fleet is either hybrid or electric vehicle (EV), with an emission reduction of around 86 per cent per EV driver.

The Sydney and New Zealand offices have NABERS ratings of 5.5 and 5 respectively, and, among its targets, the company aims to be using 100 per cent renewable energy sources for IAG-operated Australian sites by FY25. 

Allianz Australia and IAG are not the only APAC insurers taking action. In June 2023, Singlife became the first South-East Asian insurer to commit to the UN’s Principles for Responsible Investment (PRI). The PRI requires signatories to integrate ESG priorities into their investment and ownership processes with the aim of funding green technology and finance, and accelerating progress towards net zero. 

Singlife was founded in January 2022 and has prioritised ESG and net zero targets from day one. It produced its first sustainability report for 2022 (its first operating year) and, in the same year, invested more than SG$500 million in green investments, including the Altrium Sustainability Fund.

Chia Ko Wen, Singlife’s head of sustainability, says that initiatives such as the PRI and the UN’s Principles of Sustainable Insurance (PSI) have more signatories than the NZIA does. 

“Speaking for Asian insurers, I think many of them are not part of these alliances, yet they continue to set net zero commitments and have transition plans in place,” Chia told the press.

Leaving fossil fuels behind

Bosshard says that, across the board, insurers still have a long way to go in moving away from fossil fuels. 

“After 2017 there was a shift away from coal, but oil and gas is a bigger part of the global economy than coal, and it’s a bigger revenue stream for the insurance industry,” he says. “Most insurance companies just don’t want to let go of that revenue. 

“We have seen several insurers which don’t have big exposures in the oil and gas sector taking strong steps, starting with Suncorp and IAG in Australia and Aviva [in the United Kingdom]. It is easier to do if it’s not a big part of your business but, even so, kudos to them. 

“Among the companies which still play a strong role in the sector, Allianz and a few others have stopped insuring upstream oil and new oil and gas extraction projects, and that’s important and commendable. However, all of them are still insuring mid- and downstream gas projects, locking in decades of continued production.”

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