Net-Zero Insurance Alliance launches protocol for climate goals




The Net-Zero Insurance Alliance (NZIA) has released its first Target-Setting Protocol at the World Economic Forum, accelerating the transition to a global net-zero economy.

Launched at the World Economic Forum’s annual meeting in Davos, Switzerland, version 1.0 of the NZIA Target-Setting Protocol will enable NZIA members to independently set science-based, intermediate targets for their insurance and reinsurance underwriting portfolios, aligned with a net-zero transition pathway consistent with a maximum temperature rise of 1.5°C above pre-industrial levels by 2100. It requires the members to set and disclose their initial targets by July 31, 2023.

“The launch of the protocol signals the move from commitment to implementation. Now is the time for insurers to set ambitious and credible science-based decarbonization targets for their respective insurance portfolios and support a just transition to a net-zero emissions economy to avert climate catastrophe and ensure a sustainable future,” Renaud Guidée, NZIA chair and group chief risk officer (CRO) at AXA, said in a statement.

The NZIA, convened by the United Nations Environment Program’s Principles for Sustainable Insurance Initiative, is a group of leading insurers representing over 15% of world premium volume globally. The members have committed to transitioning their insurance and reinsurance underwriting portfolios to net-zero greenhouse gas (GHG) emissions by 2050.

Gaps and loopholes in NZIA’s Target-Setting Protocol

Peter Bosshard, global coordinator of Insure Our Future – a global campaign of NGOs and social movements that hold insurers accountable for their role in the climate crisis – said the protocol is “devoid of any ambition and will not align insurance underwriting with a 1.5°C pathway.”

“It offers a fig leaf for business as usual and opens the door for corporate greenwashing. Insurance companies should go beyond this low-ambition protocol and follow the science when they set their decarbonization targets,” Bosshard said.

According to Insure Our Future, version 1.0 of the NZIA Target-Setting Protocol has the following gaps and loopholes:

  • The protocol only stipulates that insurers “should” set targets to reduce the Scope 3 emissions of their customers, but does not mandate them to do so – even where emissions are significant, and data are available. Thus, insurers can only disclose the operational emissions of the coal, oil, and gas companies they insure, but ignore the much larger emissions from burning fossil fuels that their cover enables.
  • Some insurers have offered their new protocols as an alternative to the fossil fuel exclusion policies NGOs advocate for. However, their protocol does not cover the lines of business typically used to insure new power plants (construction and erection all-risk), allowing insurers to claim that they are on a net-zero pathway while continuing to insure the expansion of fossil fuel projects.
  • The target setting protocol offers different types of targets that insurers can set – from emission reduction targets to targets for insuring clean energy solutions and corporate engagement targets. For each line of business within scope, insurers can individually decide whether to apply emissions reduction or other targets, and they can wait until the end of 2024 to set the first emissions reduction target.
  • Under their emission reduction targets, insurers can aim for reductions which are as modest as 34% by 2030 – far below the reduction targets of the IPCC’s 1.5°C report of 43% and the 50% reduction targets mandated by the Race to Zero campaign.
  • Insurers have offered the engagement of fossil fuel companies in a net-zero dialogue as another alternative to exclusion policies. Such engagement has been notoriously ineffective in ending the expansion of coal, oil, and gas extraction, it was suggested. Yet, under the new protocol, insurers do not have to measure the success of their engagement in terms of positive outcomes. Instead, they can do so “simply in recognizing the re/insurer’s efforts (that may or may not result in a specific outcome).”

What do you think of NZIA’s first Target-Setting Protocol? Do you think it is a major step towards achieving a global net-zero economy, or does it need more ambition? Let us know in the comments section.



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