London: In response to recent challenges and member departures, a global insurance coalition aimed at reducing the sector’s greenhouse gas emissions has undergone a significant transformation. The Net Zero Insurance Alliance (NZIA) has now been dissolved and replaced by the Forum for Insurance Transition to Net Zero (FIT), as announced by the United Nations Environment Programme (UNEP) on Thursday.
This strategic shift reflects the evolving landscape shaped by political pressures, particularly in the United States, where Republican politicians have raised allegations of collusion, impacting the coalition’s stability and effectiveness. Such challenges underscore the broader assault on environmental, social, and corporate governance (ESG) initiatives.
The vulnerability of the NZIA, among various climate coalitions within the financial sector, stems from the decentralized nature of insurance regulation in the United States. With oversight primarily at the state level, the influence of Republican officials resistant to the shift away from fossil fuels has hindered progress within the industry.
Butch Bacani, head of the insurance team at UNEP, emphasized that the Forum for Insurance Transition to Net Zero represents a distinct initiative, rather than a mere update. He stated, “It’s not simply a Version 2.0. It’s really a clean cut and a new structure.”
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Unlike its predecessor, FIT does not mandate members to set specific emission reduction targets or report on them annually. Instead, it focuses on adopting four ‘Principles for Sustainable Insurance’, emphasizing procedural aspects such as creating measurement frameworks, developing energy transition plans, engaging with companies across sectors, and addressing barriers to climate solutions.
The relaunch follows the departure of more than half of NZIA’s members, including industry giants like AXA, Lloyd’s of London, and Tokio Marine. This exodus was triggered by a letter from attorneys general representing 23 Republican-led U.S. states in May 2023, expressing concerns and threatening legal action regarding insurers’ coalition membership.
