Net-Zero Insurance Alliance Launches Target-Setting Protocol
The Net-Zero Insurance Alliance (NZIA) launched this week the first ever target-setting protocol for insurers at the World Economic Forum’s annual meeting in Davos, Switzerland. This protocol is expected to accelerate the transition to a global net-zero economy by enabling NZIA members to set science based intermediate targets to transition insurance underwriting portfolios to net-zero. Version 1.0 requires that existing NZIA members will set and discloser their target(s) by July 31st 2023, which is just around the corner.
“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,” - Renaud Guidée, NZIA Chair and Group Chief Risk Officer at AXA.
For those not familiar, the NZIA is a a group of about 29 leading insurers representing about 15% of world premium volume, to address the net-zero challenge in the context of insurance underwriting portfolios. The NZIA is a UN-convened and member-led alliance that is dedicated to decarbonizing their underwriting portfolios, which is what leads them today to version 1.0 of the NZIA Target-Setting Protocol.
The Protocol builds on the launch of the first-ever global accounting standard to measure greenhouse gas (GHG) emissions associated with underwriting portfolios. This was previously developed by the Partnership for Carbon Accounting Financials (PCAF) In collaboration with the NZIA. This new protocol dedicated to underwriting decarbonization outlines 5 target types, within 3 main categories.
Categories:
Emissions Reduction
Engagement
Transition
Two targets will be applied to emissions reductions and two more will be applied to engagement, while one target will be applied to the re/insuring the transition category. All Existing NZIA members will be required to set at least one of the five target types by July 31st 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,” - Butch Bacani, Leader of UNEP’s Principles for Sustainable Insurance Initiative.
