Zurich Insurance Group (Zurich) has discontinued its membership in the Net-Zero Insurance Alliance (NZIA) following Munich Re’s withdrawal a mere week prior due to alleged exposure to material antitrust risks. Both operators offer Islamic solutions in the Malaysian market.
Notably, Zurich and Munich Re were the founding members of the NZIA in 2021, which currently comprises 28 insurance operator members.
In a statement explaining its discontinuation of its NZIA membership, Zurich noted that it wants to focus its resources on supporting its customers with their transition after having established a standardized methodology for measuring and disclosing greenhouse gas emissions.
While the reasoning for Zurich’s withdrawal from the NZIA is arguably vague, Munich Re cited concerns over material antitrust risks as the reason for its withdrawal.
“In our view, the opportunities to pursue decarbonization goals in a collective approach among insurers worldwide without exposing ourselves to material antitrust risks are so limited that it is more effective to pursue our climate ambition to reduce global warming individually,” Joachim Wenning, CEO of Munich Re, commented.
Although not currently impacting Munich Re’s ‘2’ ESG entity rating, Sustainable Fitch, Fitch Rating’s sustainability arm, noted that discontinuing its NZIA membership has made the company’s long-term intentions for reduction of greenhouse gas emissions less clear.
In addition to the potential ratings impact on Zurich and Munich Re, the broader concerns over antitrust risks may have implications for the insurance industry considering the role the NZIA plays in coordinating the development and integration of sustainable best practices in the industry.
According to the rating agency, without methodological support from the NZIA, operators could also lag in their development of best practices among insurers in the industry which are still in the process of developing ESG strategies.
“Should antitrust risks or other factors hinder its work, or the ability of the insurers to participate in the NZIA, then this may affect the industry’s potential to adapt its business models to the Paris Agreement climate goals,” the rating agency noted.