The network of UN-backed finance industry groups working to accelerate the transition to net zero emissions faced further controversy this week, after the Net Zero Insurance Alliance (NZIA) confirmed it was ditching all requirements for members to publish greenhouse gas emissions targets.
The relaxation in the membership rules for the group come after at least seven high profile insurance firms quit the group in May, amidst growing fears they could face legal action in the US orchestrated by Republican lawmakers and prosecutors who have sought to argue that membership of industry alliances committed to delivering net zero could breach anti-trust rules of fiduciary duties.
Investors and insurers that have subsequently left the various net zero groupings brought together under the banner of Glasgow Financial Alliance for Net Zero have tended to argue that they remain committed to delivering on net zero goals, but require more flexibility and less onerous reporting requirements as they work to do so.
Consequently, several of the groups have moved to relax the reporting requirements placed on members and on Wednesday the NZIA announced it was ditching the need for insurance firms to set net zero targets altogether.
"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.
The group also stressed that membership "does not involve any coordinated competitive conduct or exchanges of competitively sensitive information".
"As before, NZIA members who publish their own decarbonisation targets and timelines do so unilaterally and independently," it added, in comments that are likely to be interpreted as a direct response to the threat of antitrust action.
The confirmation came a day after Reuters reported that the rules would be relaxed after membership of the group fell to just 12 firms, down from a peak of 30, including many of the world's largest insurers.
Under the NZIA's original target-setting protocol members had until the end of this month to publish emissions targets for 2030 in line with approved standards and long-term net zero goals - a requirement that has now been shelved.
The drastic watering down of membership rules will anger green groups, which have repeatedly warned that the financial sector is not doing enough to deliver on the overarching net zero goals it has set. Campaigners warned the NZIA was now in danger of becoming little more than a "talking shop".
However, in its statement the NZIA insisted its current and former members remained committed to developing their own net zero strategies and argued that it had a key role to play in allowing firms to share best practices and develop effective standards and guidelines.
"Since its launch the NZIA and its partners have developed the foundational concepts and frameworks to support its members as they work towards decarbonising their insurance and reinsurance underwriting portfolios," the group said. "These include the NZIA statement of commitment, the NZIA white paper on net-zero insurance, the PCAF Insurance-Associated Emissions Standard, and the NZIA Target-Setting Protocol."
It added that the NZIA Target-Setting Protocol would continue to "serve as a voluntary best practice guide to aid in the accurate measurement, standardisation, and comparability of science-based decarbonisation targets for insurance and reinsurance underwriting portfolios and to enhance overall transparency and accountability across the insurance industry on climate action".
"Insurance market participants - whether NZIA members or not - may, and are encouraged by UNEP, to use the NZIA Target-Setting Protocol and the methodologies it outlines, which aid the measurement, standardisation, and comparability of science-based decarbonisation targets for their respective insurance and reinsurance underwriting portfolios in line with a net-zero transition pathway," it said. "UNEP is fully committed to strengthening and deepening its collaborative work with the insurance industry and key stakeholders to advance net zero insurance thinking and practices globally in order to speed and scale up the transition to a net zero economy.
"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."
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