Net-Zero Insurance Alliance creates target-setting protocol to decarbonise (re)insurance portfolios

The Net-Zero Insurance Alliance (NZIA) has launched its first target-setting protocol at the World Economic Forum’s Annual Meeting in Davos, Switzerland. The chair of the alliance called it a “landmark breakthrough”. As part of the protocol, NZIA members are required to set and disclose their initial targets by 31 July 2023. The NZIA said the protocol will enable its members to begin to independently set science-based, intermediate targets for their respective insurance and reinsurance underwriting portfolios in line with a net-zero transition pathway consistent with a maximum temperature rise of 1.5°C above pre-industrial levels by 2100. “The NZIA’s first target-setting protocol is a landmark breakthrough. For the first time ever, insurance and reinsurance companies among the largest globally have built a framework and measurement tools to assess the impact of their activities on climate change. The NZIA’s target-setting protocol will serve as a catalyst to set unprecedented and ambitious targets towards net zero,” said Renaud Guidée, NZIA chair and group chief risk officer at AXA. The NZIA said the protocol builds on the launch of the first-ever global accounting standard to measure greenhouse gas emissions associated with insurance underwriting portfolios developed by the Partnership for Carbon Accounting Financials (PCAF) in collaboration with the NZIA. “Climate change is one of the biggest challenges we face as a global society, and (re)insurers play their part in the transition to a low carbon economy. Setting targets to decarbonise (re)insurance portfolios is therefore a crucial step forward, serving as a north star on the path to net zero,” said Thierry Léger, group chief underwriting officer, Swiss Re, whose organisation leads the NZIA target-setting working group. According to the NZIA, the protocol outlines five target types within three target categories (two types within the emissions reduction category, two types within the engagement category, and one for the (re)insuring the transition category). NZIA members will be required to set at least one of the five target types by 31 July 2023, and at least one target type in each of the three target categories by 31 July 2024. Those joining the Alliance after January 2023 will have six months to set their first target and one year after that to set a target type in each of the three target categories. “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 decarbonisation 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,” said Butch Bacani, who leads UNEP’s Principles for Sustainable Insurance Initiative. Mario Greco, CEO, Zurich Insurance Group. Added: “A successful transition to net zero largely depends on action by companies. Insurers have the knowledge and tools to support them in this transition and to help businesses mitigate and adapt to the physical consequences of a warming planet.” The NZIA has grown to 29 insurers and reinsurers, representing about 15% of world premium volume globally. Jos Baeten, CEO, ASR Nederland, said: “The methodologies developed by the NZIA over the past 18 months, as well as the target-setting protocol, are essential to enable us to take the next step in complying with the promise we have made by signing the NZIA commitment: reducing the footprint of our insurance-associated emissions towards net zero by 2050. The methodologies make it possible to measure insured emissions. In addition, the protocol provides guidance in setting our targets. With the nearly 30 international (re)insurers that have made the commitment to the NZIA, we will each work towards an emission-neutral economy from our own portfolios.”

Net-Zero Insurance Alliance creates target-setting protocol to decarbonise (re)insurance portfolios

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