UN-convened Net-Zero Insurance Alliance releases white paper to advance net-zero insurance thinking and practices globally
The Unied Nations-convened Net-Zero Insurance Alliance (NZIA) has published its white paper, “Insuring the net-zero transition: Evolving thinking and practices”.
Download the white paper.
1. Context and aims
This white paper was identified as a priority by NZIA founding members last year. The aim was to produce an initial NZIA publication that will demystify, shape and advance net-zero insurance thinking and practices globally.
In simple terms, this paper is meant for those who are familiar with net zero but not insurance, those familiar with insurance but not net zero, and those unfamiliar with both net zero and insurance.
Net-zero insurance is a new concept catalysed by the activities of UN Environment Programme’s Principles for Sustainable Insurance Initiative (PSI), culminating with the launch of the NZIA last year. Therefore, the relevant net-zero insurance frameworks, definitions and methodologies are still evolving, with the NZIA statement of commitment basically serving as the foundation and ambition for net-zero insurance thinking and practices.
2. Content and focus
From the outset, the white paper recognises the full role of the global insurance industry—as risk managers, insurers and investors—in driving both climate change mitigation (i.e. reducing greenhouse gas emissions) and climate change adaptation (i.e. coping with the physical impacts of climate change and building resilience).
However, given that net zero is focused on climate change mitigation, it specifically explores how the insurance industry can support the transition to a net-zero emissions economy through its risk management and insurance activities, which is the core focus of the NZIA.
The paper covers the following topics:
· Introduction to the insurance industry
· Definition of net zero and how this links to the Paris Agreement
· The NZIA’s theory of change to drive greenhouse gas (GHG) emissions reduction in the real economy
· Closing the emissions accounting gap: From financed emissions to insurance-associated emissions
· Potential insurance underwriting approaches to net zero spanning GHG mitigation tactics: abatement, neutralisation, compensation and engagement
· NZIA priority work streams to advance net-zero insurance
· Key challenges and next steps, including the role of insurance in a just transition to net zero
Although the paper does not focus on the investment management activities of insurance companies, it is also a key role of the insurance industry in supporting the net-zero transition and wider sustainability efforts. The investor role of insurers is highlighted in the UN Principles for Sustainable Insurance and the NZIA statements of commitment. Therefore, this paper also highlights the size and own complex system of institutional investment. The net-zero commitments of insurers with respect to their investment activities are being overseen by other sub-sector alliances within the overarching Glasgow Financial Alliance for Net Zero (GFANZ), in particular the Net-Zero Asset Owner Alliance (NZAOA)and the Net Zero Asset Managers Initiative (NZAMI).
Furthermore, this white paper will be used as an integral resource for the first phase of the NZIA’s engagement strategy with policymakers, regulators and other key stakeholders. The second phase of the engagement strategy will use the technical work of the NZIA—namely, the ongoing work with the Partnership for Carbon Accounting Financials (PCAF) to publish a global standard to measure and disclose insurance-associated emissions (due in Q4 this year), and the upcoming work to publish an NZIA target-setting protocol by January 2023.
3. Global webinar
The white paper will be discussed in detail in a global webinar on 4 May 2022.
The webinar will be run twice that day in order to cater to different time zones:
· Time slot 1: 9:00am Central European Summer Time / Register here
· Time slot 2: 3:00pm Central European Summer Time / Register here
4. About the NZIA
The Net-Zero Insurance Alliance (NZIA) was established by a group of leading insurance and reinsurance companies, who are all signatories to the UN Principles for Sustainable Insurance (PSI), under the auspices of the UN Environment Programme’s PSI Initiative, the largest collaboration between the UN and the global insurance industry.
The NZIA was launched at the G20 Climate Summit in Venice in July 2021 by its eight founding members: AXA (NZIA Chair), Allianz, Aviva, Generali, Munich Re, SCOR, Swiss Re and Zurich Insurance Group. These companies have committed to individually transition their insurance and reinsurance underwriting portfolios to net-zero greenhouse gas (GHG) emissions by 2050, consistent with a maximum temperature rise of 1.5°C above pre-industrial levels by 2100, contributing to the implementation of the Paris Agreement on Climate Change. By establishing the NZIA, these insurers are building on their climate leadership as investors through their membership in the UN-convened Net-Zero Asset Owner Alliance (NZAOA) established in 2019. They are therefore demonstrating the key role of the insurance industry as risk managers, insurers and investors in supporting the transition to a net-zero economy.
As of March 2022, the NZIA has nearly tripled its membership to over 20 insurance organisations and aims to grow further to make the NZIA truly global by promoting its goals to various insurance market participants including brokers, marketplaces and associations.
Learn more at: www.unepfi.org/net-zero-insurance
For more information, please contact:
· Butch Bacani, Programme Leader, UNEP Principles for Sustainable Insurance Initiative: email@example.com
· Diana Diaz Castro, Programme Supervisor, UNEP Principles for Sustainable Insurance Initiative: firstname.lastname@example.org
· Sally Wootton, Communications Lead, UNEP Finance Initiative:email@example.com