Republican-led backlash over climate change raises concern among European insurers - WION
Republican-led backlash over climate change raises concern among European insurers - Business & Economy News
Republican-led backlash over climate change raises concern among European insurers
Story highlights
The Net-Zero Insurance Alliance was established in 2021 to collectively address carbon emissions related to underwriting.
The leaders of Europe's major insurance companies have raised concerns about the growing political resistance in the United States over aggressive policy steps required to combat climate change. This, the UN-backed group of insurers called the Net Zero Insurance Alliance says, has put their ability to collaborate in combating climate change at risk.
The Net-Zero Insurance Alliance was established in 2021 to collectively address carbon emissions related to underwriting.
Also read | Explainer: Why the insurance industry is taking over $100 billion hit from climate change losses?
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However, this initiative's future has been uncertain since May this year when a letter from 23 Republican state Attorneys General suggested that the alliance's joint targets might violate antitrust laws, following which several insurers left the group.
What was the legal challenge?
This legal challenge emerged amidst rising opposition among certain Republican politicians who view environmental activism as detrimental to the oil and gas industry and the broader economy.
Several states, including Florida and Texas, have implemented legislation to discourage environmental, social, and governance investing and financing with target to deter harms on oil and gas industry.
Axa, a prominent European insurer, was a founding member of the Net-Zero Insurance Alliance but withdrew in May.
Its chief executive Thomas Buberl told the Financial Times, "My job is to manage insurance and not to deal . . . with 23 attorneys-general in the US."
It was "far more powerful" to act collectively on climate, he said, but he added: "You also have to at some point say to yourself, OK, where are your priorities? Is there a different way of getting to the same result with less hassle?"
Christian Mumenthaler, CEO of reinsurer Swiss Re, which also left the alliance in May, echoed Buberl's sentiment.
“It’s clear that in today’s political environment, it remains very difficult: there remains some political risk, some legal risk. Then the question is, OK, for the overall cause, how much is it adding?," Mumenthaler was quoted as saying by Financial Times.
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Explainer: Why the insurance industry is taking over $100 billion hit from climate change losses?
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”