Axa has called for the creation of a new alliance in which insurers will work towards the delivery of a net-zero economy in line with global climate change targets.
Thomas Buberl, (above) the CEO of the Axa Group, this week announced the company’s proposal to create a Net-Zero Underwriting Alliance (NZUA).
Speaking at an event on climate finance event organized by French President Emmanuel Macron, to celebrate the fifth anniversary of the COP21 Paris Agreement, Mr Buberl said the insurance industry had a greater role to play.
“We have pioneered investment and insurance-related milestones since COP21, while also acting collectively within alliances,” he said. “We have reframed the Paris Agreement as an investment roadmap by committing to climate neutrality in our investments.
“We actively support coalitions that bring collective solutions to issues that require industry-wide cooperation. Today, on the fifth anniversary of the signing of the Paris Agreement, we support the creation of an UN-convened ‘Net-Zero Underwriting Alliance’ to collectively extend our commitment to climate neutrality to our insurance business. And we call for its creation ahead of COP26 in order to enshrine, in the ‘Glasgow Agreement’, the role of private finance as a key enabler to achieve the transition to a low carbon economy.”
The proposed NZUA follows the creation of a Net Zero Asset Owners Alliance (NZAOA) in September 2019, and the announcement of a new Net Zero Asset Managers Initiative on December 10. Insurance companies which are members of the NZAOA and will need to consider joining the new NZUA include Allianz, Aviva, AXA, Generali, Munich Re, QBE, SCOR, Swiss Re and Zurich.
The initiative has been welcomed by climate action groups who said while the scheme was a positive step it needed to be turned into tangible action.
The Insure Our Future campaign said proposal was a sign that insurers are increasingly accepting responsibility for the emissions of the projects they are underwriting. However, the campaign warns that the new alliance needs to combine long-term ambition with tangible short-term action in order to be meaningful.
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 1.5°C. 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.”
He added as society’s risk managers, insurance companies have a special responsibility to mitigate catastrophic climate change. They have access to the best climate science and some of them have warned about climate risks for many decades. As their underwriting restrictions on asbestos and coal have shown, insurers can support a rapid shift away from destructive products by no longer covering certain risks.
Lucie Pinson, Executive Director of Reclaim Finance, said: “The recent Production Gap Report found that we must reduce the production of fossil fuels by 6% every year until 2030 if we want to be consistent with a 1.5°C trajectory. The new initiative must act on science: 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.”
Regine Richter, Finance Campaigner at Urgewald, added: “Meaningful net-zero commitments need to learn from the failures of the past. They need to cover all greenhouse gas sources and cannot rely on unproven negative emissions technologies, unsustainable tree plantations and other dubious carbon offset schemes.”