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A number of prominent members of the Net Zero Insurance Alliance have quit the organization in recent months and this has prompted its leadership to take urgent steps to stop further member bleeding.
The group of insurers is meeting today to talk about its future course of action, which would focus on ending membership cancellations after giants including Munich Re, Zurich Insurance Group, and, most recently, Hannover Re, left the Net Zero Insurance Alliance.
According to Bloomberg, the exits are a result of “an escalation of Republican Party attacks on businesses and investors perceived to be embracing environmental, social and good governance goals” in the United States.
According to the insurers themselves, antitrust risks in the U.S. were the reason for Munich Re leaving, while Zurich Insurance did not supply such a reason, saying only that it wanted "to focus our resources to support our customers with their transition". Like the Swiss major, Hannover Re did not cite specific reasons for its NZIA exit.
A growing backlash against ESG in Republican-led states is certainly a serious consideration. Some states have directly threatened litigation in case there is evidence of discriminatory business practices such as prioritizing ESG factors over others.
It may well be the case that Munich Re is the only one saying the quiet part aloud and it was those Republican threats that got Zurich International and Hannover Re to drop the NZIA group, too.
However, these are companies with global operations. They are not focused exclusively on the U.S. and its Republican-led states. And this is part of the problem, it seems.
“Global companies find themselves between a rock and hard place,” Karl Racine, a former attorney general of the District of Columbia, told Bloomberg. While Europe has “embraced ESG and established regulatory and legal requirements to support it,” the U.S. has not, on such a scale.
As a result, “Global companies are, thus, confronted with challenging questions as to how to navigate these disparate waters,” Racine explained.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.