Insurance companies are fleeing the climate alliance after ESG setbacks in the US

LONDON/FRANKFURT, May 25 (Reuters) – A U.N.-convened climate alliance of insurers saw at least three more departures on Thursday, including the group’s leader, as insurers cower in the face of opposition from U.S. Republican politicians.

At least seven members of the Net-Zero Insurance Alliance (NZIA), which was launched in 2021, have now left, including five of the eight founding signatories.

The departures on Thursday included AXA, whose CEO Renaud Guideé had led the alliance. The French insurer said in a statement that it is leaving to “continue its individual sustainability journey.” Germany’s Allianz ( ALVG.DE ) and French reinsurer SCOR ( SCOR.PA ) have also quit.

NZIA, part of the Glasgow Financial Alliance for Net Zero set up by UN climate envoy Mark Carney, requires members to commit to reducing their greenhouse gas emissions.

The group has been hit by growing political opposition from some Republicans in the US, who say the group could violate antitrust laws by working together to reduce its clients’ carbon emissions.

This month, 23 U.S. attorneys general told NZIA members that the group’s goals and demands appeared to violate both federal and state antitrust laws.

They gave insurers a month to respond in a May 15 letter — the latest salvo from Republicans against financial institutions that factor environmental, social and governance (ESG) factors into their decision-making.

NZIA members held talks on Thursday to discuss the alliance’s options, sources familiar with the group said.

John Neal, chief executive of Lloyd’s of London, which is a member, told Reuters on Wednesday that the alliance needed to make its membership rules less prescriptive or risk falling apart.

A spokesperson for the NZIA did not respond to requests for comment.

According to the NZIA website, it still has 23 members including Aviva, Lloyd’s and Tokio Marine Holdings. Most of those who have quit have significant American businesses, but so do some of those who are still in.

“We have to wonder if their rejection of the alliance has more to do with fear of losing business in the US than real legal danger,” said Patrick McCully, senior analyst at campaign group Reclaim Finance.

“Real climate leaders need to fight climate denial, not throw themselves at it. What is crucial now is that insurance companies do not reverse their existing climate pledges. If they cannot act together, they must act alone.”

While other financial industry alliances, including one for banks, have not seen many departures, the exit of so many of the world’s biggest insurers is a blow to UN-led efforts to harness the power to bring together financial institutions to try to reduce emissions.

Legal experts have told Reuters that it would be difficult to make a case using antitrust rules against a company that cooperates to tackle climate change through an alliance.

The political backlash in parts of the US had made insurance companies particularly sensitive to such accusations, they say.

Insurers that have left NZIA, including Swiss Re ( SRENH.S ), Munich Re ( MUVGn.DE ), Zurich Insurance ( ZURN.S ) and Hannover Re ( HNRGn.DE ), say their exits will not change their individual commitments to addressing climate change.

Allianz said in an emailed statement on Thursday that it had decided to leave NZIA and would stick to its own climate targets.

SCOR’s new CEO announced his resignation at its annual general meeting earlier on Thursday along with some new guidelines for climate and energy transition. A SCOR spokesman declined to give any reason for the departure.

Reporting by Tommy Reggiori Wilkes in London and Alexander Huebner and Tom Sims in Frankfurt Editing by Kirsten Donovan, Matthew Lewis and Richard Chang

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