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\u2019s 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.<\/span><\/b>\u00a0<\/span><\/p>\n<\/div><\/div><\/div> 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\u2019 protocols and guidelines, and to incorporate key elements from relevant reports and statements issued in recent years. These include materials from <\/span>GFANZ<\/a><\/span> and <\/span>its leadership<\/a><\/span>, the International Panel on Climate Change (IPCC) (3), the <\/span>International Energy Agency<\/a><\/span>, the UN <\/span>Race to Zero Campaign<\/a><\/span> (of which the NZIA is a partner), and the UN <\/span>High-Level Expert Group<\/a><\/span> on net zero (HLEG). Frustratingly, the NZIA has failed to learn from these other bodies.<\/span> Below are some of the key areas where the NZIA\u2019s Protocol falls badly short in addressing the responsibilities of insurers and reinsurers to address the climate crisis.<\/span>\u00a0<\/span><\/p>\n<\/div> While the Protocol allows targets to be set based on physical intensity metrics, these are required to result in absolute reductions \u201cin line with the minimum threshold of 34%\u201d.<\/span><\/b> 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.<\/span>\u00a0<\/span><\/p>\n It is also positive that the Protocol says that carbon offsets shall not be counted toward targets.<\/span><\/b> 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).<\/span>\u00a0<\/span><\/p>\n<\/div> NZIA needs to improve its Protocol and\u00a0individual insurers need to take action.<\/span><\/b> 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.<\/span><\/b>\u00a0<\/span><\/p>\n<\/div>An astounding\u00a0lack of ambition<\/h1><\/span>
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A protocol with gaps and loopholes<\/h1><\/span>
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Some positives<\/h1><\/span>