The Net-Zero Insurance Alliance (NZIA) has been far slower than the other main sectoral alliances of the Glasgow Financial Alliance on Net Zero (GFANZ) to issue guidelines for its members. This delay gave the insurers time to learn from the shortcomings of others. Yet the alliance’s first protocol shows an astounding lack of ambition and urgency. It is a step backward from the recommendations and guidelines of GFANZ and the other sectoral alliances, and even from the policies on fossil fuels already adopted by many of the NZIA members and other insurers. 

The NZIA issued its long-awaited first Target-Setting Protocol on January 17 (1). This comes almost two years after the Net-Zero Banking Alliance released their guidelines, and even longer after the alliances of asset owners and asset managers released theirs (2). The NZIA therefore had plenty of time to learn from its peers’ protocols and guidelines, and to incorporate key elements from relevant reports and statements issued in recent years. These include materials from GFANZ and its leadership, the International Panel on Climate Change (IPCC) (3), the International Energy Agency, the UN Race to Zero Campaign (of which the NZIA is a partner), and the UN High-Level Expert Group on net zero (HLEG). Frustratingly, the NZIA has failed to learn from these other bodies. Below are some of the key areas where the NZIA’s Protocol falls badly short in addressing the responsibilities of insurers and reinsurers to address the climate crisis. 

An astounding lack of ambition

  • The Protocol fails to reflect the urgency with which its members must act. The Protocol sets three categories of targets: reduction, engagement, and transition. Members are supposed to set their first targets by July 2023, but only in one of these three categories. They do not need to set targets in all three categories  — and so including emission reductions — until July 2024. Given that the NZIA is already behind the other net-zero alliances in issuing its guidelines, and that there are now less than eight years left until the end of 2030, this timetable leaves little time for NZIA to start serious action to cut its emissions.
  • The Protocol’s required emission reduction targets fall far short of what is necessary. The Protocol allows members to set targets to reduce emissions of CO2-equivalent (from all main greenhouse gases combined) in their underwriting portfolios by as little as 34%. It does not require setting CO2-only targets. By comparison the IPCC’s Sixth Assessment Report states that 1.5° pathways require a 45% cut in CO2e between 2019 and 2030, and a 50% cut in CO2 over the same period (4). The Race to Zero and HLEG both call for CO2 emissions to be halved by 2030, and GFANZ has also been clear about the importance of this goal (5).

A protocol with gaps and loopholes

  • The Protocol completely fails to address fossil fuel expansion – or indeed fossil fuels at all.  It is astonishing that the Protocol does not even mention the need to stop financing coal, especially given that NZIA founder members Allianz, AXA (NZIA chair), Generali, Munich Re, Scor, Swiss Re and Zurich were among the first major financial institutions to set meaningful restrictions on support for coal back in the late 2010s (6). The Protocol has nothing to say on the need to directly address emissions from oil and gas and includes the words “fossil fuels” only in a footnote. This compares unfavorably with the Net-Zero Asset Owners Alliance (AOA) which calls on its members to stop finance for new coal projects and — in some limited cases — for new oil and gas projects (7). 
  • The Protocol “engagement target” requirements could by met by insurers just doing what they already do: selling policies to insure against weather risks. NZIA members can set an engagement target based on helping their clients “manage and mitigate possible transition risks.” So just selling weather-related damage and business interruption insurance would seem to fulfil the terms of this target (8). Engagement targets should require NZIA members to explain clearly to their clients their expected rate of emission reductions and lay out the consequences in term of loss of coverage if these targets are not met.
  • The Protocol does not require its members to cover clients’ Scope 3 emissions. The Race to Zero and HLEG are both clear that net-zero commitments from financial institutions must count the Scope 3 emissions of the companies they support (such as those from the use of a company’s products). But the NZIA only recommends that targets include Scope 3, even where data is available and these emissions are known to be material (such as in the oil and gas industry where they are typically on the order of 90% of total emissions).
  • The Protocol declares to be out of scope two business lines which are key to the development of new power and other energy projects. Not requiring their members to restrict the provision of surety bonds and “Construction/Erection All Risk” insurance allows insurers to claim they are committed to net zero even while providing the services essential to expand fossil fuel supply and consumption.
  • The Protocol declares the most important type of reinsurance to be out of scope. Reinsurers will only have to set decarbonization targets for facultative reinsurance and direct insurance which represent a minor share of their business. They do not have to set targets for their treaty reinsurance (9). 

Some positives

While the Protocol allows targets to be set based on physical intensity metrics, these are required to result in absolute reductions “in line with the minimum threshold of 34%”. As discussed above, this 34% CO2e reduction by 2030 target is insufficient. However, it is an improvement on how the other alliances treat intensity targets that NZIA members must ensure that these intensity targets (such as tonnes of CO2e per barrel of oil) must be consistent with actual reductions to the atmosphere in tonnes of CO2e. 

It is also positive that the Protocol says that carbon offsets shall not be counted toward targets. This is in-line with the position of the Science Based Targets initiative, and an improvement upon the current position of any other net zero alliance (10). 

NZIA needs to improve its Protocol and individual insurers need to take action. As risk-managers, insurers are well aware of the steep emission reductions needed to reduce the risk of catastrophic climate change. It is therefore both surprising and disappointing that the NZIA could come up with such inadequate guidelines. The NZIA has committed to updating the Protocol at the end of 2024. It needs to bring this date forward to the end of this year and to address the many shortcomings of this initial version. In the meantime, insurers need to continue with their own actions to pressure the fossil fuel industry to reverse their current trend of expansion and get on a path to rapid emission reductions through the rest of this decade and beyond. 


  1. See the NZIA Target-Setting Protocol.  
  2. See the guidelines of the Net Zero Banking Alliance, Net Zero Asset Manager Initiative and Net Zero Asset Owner Alliance.  
  3. See the IPCC’s Sixth Assessment Report. 
  4. This 50% cut in CO2 was originally described in the IPCC’s 2018 special report on 1.5°C. The 2022 Sixth Assessment Report Working Group III describes a 50% reduction in CO2 2019-2030 (and 45% reduction in Kyoto-GHGs) as a “key characteristic” of “mitigation pathways with immediate action towards limiting warming to 1.5°C” (IPCC AR6 WGIII, Technical Summary, Table TS.2, p.TS-31). 
  5. See e.g. “Amount of finance committed to achieving 1.5°C now at scale needed to deliver the transition,” GFANZ, 3 November 2021. The AOA requires its member’s portfolio targets to include CO2e reductions of at least 22% by 2025 and 49% by 2030.  
  6. See “Insuring Coal No More: The 2018 Scorecard on Insurance, Coal and Climate Change,” Unfriend Coal, December 2018 
  7. See “Fuel on the Fire: GFANZ financing of fossil fuel expansion,” Reclaim Finance, January 2023, p.24. The NZIA also ignores the “No New Coal” statement issued by GFANZ co-chairs Mark Carney and Michael Bloomberg and vice-chair Mary Schapiro in August 2022. 
  8. Transition risks in finance mean in large part the risks that climate change poses to business operations, including physical assets and supply chains. 
  9. A greenhouse gas reporting standard for insurance-associated emissions which was released in November 2022 by the Platform for Carbon Accounting Financials (PCAF) in collaboration with the NZIA. This also excludes treaty reinsurance although it states that a working group has been set up to evaluate its future inclusion. 
  10. The draft of the third version of the AOA’s protocol takes a similar position on excluding offsets from targets. The final version is due to be published at the end of January.