The United Nations-convened Net-Zero Insurance Alliance (NZIA) launched the Alliance’s first Target-Setting Protocol at the World Economic Forum’s Annual Meeting in Davos, Switzerland.
As risk managers, insurers and investors, the insurance industry has an important role to play in the transition to a net-zero emissions global economy by supporting their clients in taking concrete action to achieve net zero.
Version 1.0 of the NZIA Target-Setting Protocol (the Protocol) will enable NZIA 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. With the launch of the Protocol, existing NZIA members are required to set and disclose their initial target(s) by 31 July 2023.
This important milestone comes 18 months after the Alliance’s launch at the 2021 G20 Climate Summit in Venice by eight of the world’s leading insurers and reinsurers.
Since then, the Alliance has grown to 29 insurers and reinsurers representing about 15% of world premium volume globally.
“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 Protocol builds on the launch of the first-ever global accounting standard to measure greenhouse gas emissions associated with insurance underwriting portfolios (“insurance-associated emissions”) 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.
The Protocol outlines five target types within three target categories (i.e. two types within the emissions reduction category, two types within the engagement category, and one for the re/insuring the transition category). Existing 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, which created the NZIA last year.
The NZIA also recently announced that the Alliance will continue to collaborate with the Science Based Targets Initiative (SBTi) on the development of its approach to target-setting for insurance and reinsurance underwriting portfolios in line with SBTi’s upcoming Financial Institution Net-Zero Standard (FINZ).
What is the net-zero Alliance?
The the industry-led, UN-convened Net-Zero Banking Alliance brings together a global group of banks, currently representing over 40% of global banking assets, which are committed to aligning their lending and investment portfolios with net-zero emissions by 2050.
What does net-zero mean?
We’ve all heard the term net zero, but what exactly does it mean? Put simply, net zero refers to the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere. We reach net zero when the amount we add is no more than the amount taken away.
What is version 1.0 of the net-zero Insurance Alliance NZIA target setting protocol?
Version 1.0 of the NZIA Target-Setting Protocol (the Protocol) will enable NZIA 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
Has the EU committed to net zero?
The EU aims to be climate-neutral by 2050 – an economy with net-zero greenhouse gas emissions. This objective is at the heart of the European Green Deal and in line with the EU’s commitment to global climate action under the Paris Agreement
How many countries announced net zero targets?
Eight countries have already reached net zero emissions, helping combat climate change, according to latest data. These ‘carbon sinks’ absorb more carbon dioxide from the atmosphere each year than they emit. Most are small, with limited industrial sectors and prioritize ecological protection measures.
