NZIA issues target-setting protocols for net-zero transition

Announced at the World Economic Forum in Davos, Switzerland, the protocols will enable Net Zero Insurance Alliance members to begin to independently set science-based, intermediate targets for their respective insurance and reinsurance underwriting portfolios.

These plans have been coming for a while. in 2022, Allianz’s Glen Clarke said that regulation like this will soon become a reality.

Clarke explained: “Soon, companies won’t just have to start providing reports on their sustainability performance; they will also need to start providing reports on what their clients are doing, and how they are helping them to achieve net-zero operations.”

And these regulations have now become reality, with existing NZIA members required to set and disclose their initial targets by 31 July 2023.

Widespread acclaim 

The move has seen widespread acclaim, with Ben Howarth, chief sustainability officer at the Association of British Insurers, saying the measures are “essential”.

“Firms setting credible and transparent targets to show how they can contribute to net zero is essential, and was a key recommendation in our Climate Change Roadmap,” Howarth said.

“Several of our members were involved in designing the NZIA’s target setting protocol, which will help make the process more consistent and, when combined with other initiatives such as the Transition Plans Taskforce’s framework, will allow our sector to track crucial progress on reducing carbon emissions.”

Allianz Group, a founding member of the NZIA, welcomed the announcement in a statement.

It said: “We welcome the ground-laying work of the United Nations, and our fellow NZIA members, to develop the first science-based net-zero framework for the insurance sector. The implementation of net-zero targets in the insurance industry clearly contributes to the necessary transformation to a net-zero economy.”

Elsewhere, the Generali Group tweeted that the protocols are part of what the launch of the NZIA was established for. “NZIA’s Target-Setting Protocol represents the last of three milestones connected with the launch of the Alliance.”

Meanwhile, Aviva called the protocols “crucial” in the fight against climate change.

It said in a tweet: “We’re proud to have contributed the to the development of the NZIA target-setting protocol. This guidance will help other insurers set science-based targets, which are crucial in the fight against climate change.”

Devoid of ambition

However, not everyone was satisfied with the announcement.

Peter Bosshard, global coordinator of the Insure Our Future campaign, said the protocol is not ambitious enough and “opens the door for greenwashing”.

Bosshard said: "NZIA protocol is devoid of any ambition, and will not align insurance underwriting with a 1.5°C pathway. It offers a fig leaf for business as usual, and opens the door for corporate greenwashing. Insurance companies should go beyond this low-ambition protocol and follow the science when they set their decarbonisation targets."

Meanwhile, Paddy McCully, senior analyst with Reclaim Finance, says the NZIA is “late to the table”.

McCully said: “If any industry should be aware of the horrendous damage that climate-fuelled disasters are already causing, it should be insurance. Yet NZIA has been late to the table, and the guidelines show an astounding lack of ambition.

"It could have learnt from the shortcomings of other sectoral alliance, but instead took a step backwards in comparison. No mention is made of coal, for instance, and there is no requirement to set emissions targets before the end of 2024.”