The chief executive officer of Zurich Insurance Group AG has spoken out against the network of voluntary climate alliances that represent some of the biggest names in global finance, calling them “political and bureaucratic.”
Mario Greco, who led his firm out of the Net Zero Insurance Alliance earlier this year amid a wider exodus from the group, said the decision followed a realization that, as things stand now, the goal of limiting temperature rises to 1.5C as enshrined in the Paris climate agreement “will never be achieved.”
Therefore, “we need to do something else,” he said in an interview on Thursday. “Every company needs to stand for what they believe in; you cannot hide behind alliances or committees and not even governments. You have to define what you stand for.”
While Zurich has quit the insurance alliance, it remains a member of the broader financial-sector group known as GFANZ through its continued presence in another sub-group: the Net-Zero Asset Owner Alliance. But such coalitions have faced increasingly targeted attacks from the Republican Party, with attorneys general across several US states threatening legal action.
Allianz SE, another insurer that quit NZIA earlier this year, said the decision was necessary in order to shield investors from the potential fallout of any litigation.
“At the end of the day, we have a fiduciary duty to protect our shareholders,” Allianz Chief Financial Officer Giulio Terzariol said on the company’s quarterly earnings call on Thursday.
It would “not be responsible to not take action,” he said, “because the legal system in the US, the political system can be very, very tricky.”
Earlier this year, the CEO of AXA, Thomas Buberl, said the insurance industry had been “brutally attacked, and on legal grounds” preventing firms like his from “progressing together” within a formal alliance.
Spokespeople for NZIA and GFANZ weren’t immediately available to comment.
Greco signaled that the landscape now is very different compared with two years ago, when many voluntary climate alliances were formed.
“The whole sustainability efforts are changing now,” he said. “We have a commitment and a purpose and alliances don’t give us that. All these alliances are becoming quite political and bureaucratic, they want to run processes et cetera.”
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Greco also suggested that more firms might consider quitting voluntary climate coalitions.
“I think you’ll start to see an increase in companies looking to stand by themselves and say ‘this is my commitment to sustainability,”’ Greco said. “But this trend of alliances or committees will progressively disappear, because it’s almost become an industry in itself.”
Firms joining NZIA pledged to transition their insurance and reinsurance underwriting portfolios to net zero emissions by 2050. They also promised to set individual intermediate emissions-reduction targets aligned with climate science and report on their progress annually.
(GFANZ is co-chaired by former Bank of England Governor Mark Carney and Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.)
--With assistance from Alastair Marsh and Saijel Kishan.
(Adds comments from Allianz CFO in fifth and sixth paragraphs.)
