Climate campaigners welcome proposal, but warn sector's net zero pledges are meaningless unless insurers end coverage for carbon intensive fossil fuel projects in the near-term
The chief executive of French insurance giant Axa has called for the creation of a 'net zero underwriting alliance' that would see member companies from across the insurance sector align their business activities with the 1.5C warming pathway required under the Paris Agreement.
Setting out the idea during the Climate Action Summit hosted by the UK, France, Italy, Chile, and UN on Saturday, Thomas Buberl said the coalition should be launched ahead of the COP26 Climate Summit that is set to be held next autumn in Glasgow.
Green finance is set to be one of five key focus areas for the critical climate summit that is being hosted by the UK and Italy, and in a blog post published over the weekend Buberl suggested a new coalition of net zero-aligned insurers could highlight how private finance can be a "key enabler" of the transition to a low carbon economy.
"We actively support coalitions that bring collective solutions to issues that require industry-wide cooperation," Buberl wrote. "Today, on the fifth anniversary of the signing of the Paris Agreement, we support the creation of a UN-convened ‘net zero underwriting alliance' to collectively extend our commitment to climate neutrality to our insurance business."
Insurance companies have faced growing calls to pay closer heed to climate risk and end their support for fossil fuel projects, with history showing that insurers have the power to accelerate a rapid shift away from damaging projects by refusing to cover certain risks. While progress has been made in curbing the coal industry's access to cover - in the past three years nearly two dozen major insurers have adopted policies that end or limit insurance for the fossil fuel - insurers continue to play a crucial role in providing insurance for many environmentally-destructive oil and gas projects.
Burberl's proposal was largely welcomed by campaigners as a sign that insurers are increasingly accepting responsibility for the emissions produced by the projects they cover. However, they counselled that any commitments to achieve net zero emissions by mid-century needed to be backed by immediate steps to phase-out support for all new fossil fuel projects in order to prove effective and deliver the much-needed emissions reductions required this decade to steer a 1.5C pathway.
Lucie Pinson, executive director of campaign group Reclaim Finance, stressed the production of fossil fuels must shrink by six per cent annually until 2030 if the Paris Agreement's more ambitious sceario is to be achieved. "The new initiative must act on science," she said. "Net zero commitments by 2050 must include an immediate end to insuring new oil and gas production projects on top of any new coal projects, or they risk being seen as greenwashing."
And Peter Bosshard, coordinator of the Insure Our Future campaign, said: "The proposed net zero underwriting alliance offers an opportunity for the insurance industry to align its business with a pathway to 1.5C. In order to be credible, the members of the new alliance need to back up their long-term commitments with an immediate shift away from fossil fuel expansion projects."
The proposed 'net zero underwriters alliance' follows the creation of the Net Zero Asset Owners Alliance (NZAOA) in September 2019 and the announcement of a new Net Zero Asset Managers Initiative last week. A number of insurance companies, including Allianz, Aviva, Axa, Generali, Munich Re, QBE, SCOR, Swiss Re and Zurich, are members of the former group, fuelling hopes that Axa's proposal for a third major net zero alliance for the financial world could be taken up.